* EU ready to act to put a stop to fishing conflict
* Fisheries chief says won't affect Iceland EU bid
BRUSSELS, Sept 27 (Reuters) - The European Union threatened retaliation against Iceland and the Faroe Islands on Monday in a "mackerel war" over fishing rights in the northeast Atlantic that is affecting EU member states.
EU fisheries chief Maria Damanaki said she was prepared to reassess other fishing quotas in response, but rejected any suggestion the dispute would have an impact on Iceland's bid to join the 27-nation European Union.
Iceland and the Faroe Islands have unilaterally increased their mackerel fishing quotas this year after the silvery-blue fish began swimming further north than usual. [ID:nLDE67M11F]
The increased catches have brought them into conflict with fishermen from Scotland, Ireland and Norway and led to comparisons with the "cod wars" of the 1950s and 1970s, which led to a naval stand-off between Iceland and Britain.
On Monday, a meeting of EU farm and fisheries ministers gave Damanaki a mandate to resolve the dispute in negotiations on long-term fisheries agreements with the two partners.
Damanaki said if Iceland and the Faroe Islands persisted with their "exaggerated quotas" for mackerel, the EU would be ready to retaliate in the talks on fishing quotas for other stocks such as cod, which are scheduled for October.
"The unilateral actions by Iceland and the Faroe Islands are nothing short of unacceptable," Damanaki told reporters.
"The amount of mackerel which Icelandic and Faroese vessels have taken out of the sea this year goes way beyond what they have ever fished before ... defying all the hard efforts of our own industry to protect this stock," she said.
One EU diplomat in the talks described Iceland's mackerel quota move as "a pre-emptive strike", designed to force the EU to recognise the climate-induced northerly migration of mackerel in future quota talks.
Damanaki said the EU was prepared to take account of the northward migration of mackerel in any long-term fisheries agreement, but not at any cost.
"I would also like to make it very clear that the Commission does not connect this issue to the procedure for the (EU) accession of Iceland," she said. (Reporting by Charlie Dunmore)