The European Commission has accused Turkey of "serious backsliding" in rights and the rule of law since a failed coup on 15 July.
An EU official said Turkey was not heading in a European direction, as he gave an annual appraisal of its progress towards EU membership.
The Turkish president challenged the EU to "make your final decision".
For days there has been a war of words, with Europe accused of failing to take terrorism in Turkey seriously.
And a Turkish minister rejected the latest appraisal as "not objective".
The worsening relations have led to fears that an EU-Turkey deal on migrants in March could collapse.
Under the March 2016 agreement, migrants arriving in Greece are now sent back to Turkey if they do not apply for asylum or their claim is rejected, but Turkey complains it has not got its end of the bargain.
A conditional promise of visa-free travel now seems a long way off.
Nonetheless, the Commission statement stopped short of severing talks or imposing sanctions - reflecting the reliance of each side on the other, say commentators.
Negotiations on Turkey's accession to the EU began in 2005, and its progress on 72 benchmarks are reported on annually along with other would-be new members.
In a tweet sent as the report was launched, EU enlargement commissioner Johannes Hahn said there had been "serious backsliding in areas of #RuleofLaw and #fundamentalrights". The post-coup crackdown, he said, had "affected all spectrums of society".
The Commission highlighted several issues of concern including:
- "Very extensive suspensions, dismissals, arrests and detentions... affect[ing] the whole spectrum of society"
- "The adoption of a law allowing the immunity of a large number of deputies to be lifted and the ensuing detentions and arrests" of deputies from the pro-Kurdish HDP party, including the two co-chairs
- The "very serious deterioration in the security situation" in the south-east of the country, including "serious allegations of human rights violations and disproportionate use of force"
- "Backsliding in the past year, in particular with regard to the independence of the judiciary... and in the area of freedom of expression" including freedom of the media
- "Renewed considerations to introduce a bill in parliament to reinstate the death penalty"
In a statement on Tuesday, EU foreign policy chief Federica Mogherini, condemned last Friday's bomb attack in the south-eastern, mainly Kurdish city of Diyarbakir which followed the HDP detentions and killed 11 people, demanding an end to violence.
But she added that actions against the outlawed Kurdistan Workers' Party (PKK) had to be proportional and respect human rights.
European Commission President Jean-Claude Juncker, meanwhile, used blunt words to voice his disdain for Turkish actions.
"I say this with bitterness, I who am a friend of Turkey, that every day Turkey is moving further away from Europe," he said on Tuesday. "We need Turkey... but we cannot compromise on our main principles", he said, challenging Turkey to "clearly say whether it wants to be a member of the EU or not".
Earlier this week, Luxembourg Foreign Minister Jean Asselborn compared Turkey's purge to methods used by Nazi Germany.
The EU's criticisms have been angrily rejected by Turkish leaders.
On Tuesday, the Turkish foreign ministry branded the criticisms "unacceptable", saying European nations "insistently refused to understand Turkey's sensitivities concerning terrorism" - and for tolerating the PKK despite its EU status as a terrorist organisation.
"The EU has lost its plausibility and credibility with the Turkish people on the issue of the struggle against terrorism," the statement said.
President Recep Tayyip Erdogan gave a frustrated response on Wednesday, telling a business group in Istanbul: "They say unabashedly and shamelessly that the EU should review its negotiations with Turkey."
"You are late, go and review them as soon as you can. But don't just review them - go and make your final decision."
He referred explicitly to the migrants packed into Turkish camps under the terms of the March deal, saying: "What if the negotiations end and they open the gates, where would we put those three million refugees?
"That is their worry. That is why they cannot come to the end point.''