UPDATE 2-Hungary offers new candidate for EU executive

* Commission team needs vote of approval from Parliament

* Lawmakers have rejected Hungary and Romania candidates (Adds Hungarian prime minister’s quotes on candidate)

BRUSSELS/BUDAPEST, Sept 30 (Reuters) - Hungary is set to propose diplomat Oliver Varhelyi as its member of the EU’s executive after the European Parliament blocked the first candidate put forward by Prime Minister Viktor Orban, the premier said on Monday.

Varhelyi would replace former justice minister Laszlo Trocsanyi as a candidate for the European Commision. He was rejected earlier on Monday by the EU parliament’s legal affairs committee, citing conflicts of interest.

Orban said he had talked earlier on Monday to future EU Commission President Ursula von der Leyen, who requested that he replace Trocsanyi.

“I did not reject the (incoming) President’s request but I will not have anyone pick and choose from Hungarian politicians,” Orban said. “Under the circumstances I can only propose a technocrat, someone who knows the EU inside out and is not a political nominee.”

“And indeed I designated our EU Ambassador, Oliver Varhelyi, as Hungary’s official candidate and asked Madame President to contact him.”

The move spares von der Leyen a political headache.

Otherwise, she would have had to decide whether to push through the candidate in the face of lawmakers’ rejections or pick a fight with Orban.

She also faces a similar issue with the Romanian candidate, Rovana Plumb.

Plumb, designated as the next EU transport commissioner, and Trocsanyi, who was ear-marked to be commissioner for EU enlargement, were told by lawmakers that their confirmation hearings could not take place because of problems with their financial statements.

Romania has yet to put forward a new name.

Zoltan Kovacs, Orban’s spokesman, defended Trocsanyi on Twitter.

“Trocsanyi’s true crime is that he helped protect Hungary from migration” he said, adding “the pro-immigration parties” could not tolerate as a commissioner someone who had closed the border to immigrants.

Von der Leyen’s team needs to pass a confidence vote in the parliament before taking office for five years from Nov. 1. (Additional reporting by Marton Dunai in BUDAPEST; editing by Francesco Guarascio and Philip Blenkinsop; Editing by Toby Chopra and Grant McCool)