The report is highly critical of Ankara's crackdown on human rights and civil liberties
The top EU official in charge of negotiation with Turkey said the country is moving rapidly away from the path of European Union membership on Tuesday.
"Our analysis shows that the country (Turkey) continues to take huge strides away from the European Union, in particular in the areas of rule of law and fundamental rights" said European Enlargement Commissioner Johannes Hahn.
Erdogan's government has led a continued crackdown on human rights and freedom of expression since the July 2016 attempted coup.
Dutch ALDE MEP Marietje Schaake told Euronews she thought the commission did not go far enough in its criticism of Ankara saying.
"It cannot be that there is some cynical outcome between the Commision, the member State Governments and Erdogan's government that would only be a pragmatic approach to Foreign Policy objectives, trade and some kind of people to people contact without putting human rights and rule of law front, center and future of that relation," she warned.
Earlier, Germany's EU minister Michael Roth told reporters in Luxembourg the European Union should not stop its accession talks with Turkey despite a lack of progress and questions about the rule of law in the country.
But Austria's minister Gernot Bluemel said the talks should be halted, while Belgian Foreign Minister Didier Reynders said the negotiations were currently 'frozen.'
The so called refugee deal, signed by the EU and Turkey in March 2016 means the country remains a key partner in Europe's plans to curb the number refugees arriving on its shores.