By Krisztina Than and Ivana Sekularac 

SERBIAN-HUNGARIAN BORDER (Reuters) - Hungary's right-wing government shut the main land route for migrants into the EU on Tuesday, taking matters into its own hands to halt Europe's unprecedented influx of refugees while the bloc failed to agree a plan to distribute them.

Crowds of migrants built up at Serbia’s northern border with Hungary, their passage blocked by a razor wire fence.

Under new rules that took effect from midnight, Hungary says anyone seeking asylum at the Serbian border will automatically be turned back. Anyone trying to sneak through will face jail.

Prime Minister Viktor Orban, one of the continent's loudest opponents of mass immigration, says he is acting to save Europe's "Christian values" by blocking the main overland route used by mainly Muslim refugees, through the Balkans and across his country via its border with Serbia.

In scenes with echoes of the Cold War, families with small children sat in fields beneath the former communist country's new 3.5-metre high fence, which runs almost the length of the border.

Hundreds of thousands of people have been arriving at the EU's southern and eastern edges and making their to the richer countries further north and west, in the greatest migration to Western Europe since World War Two.

With emergency talks having failed to break a deadlock over an EU plan to force member countries to accept quotas of refugees, Germany's Interior Minister said the bloc should consider imposing financial penalties on countries that refuse.

Record arrivals forced Germany and several neighbors to reimpose emergency frontier controls this week, unraveling two decades of borderless travel within the 26-member Schengen zone, one of the EU's flagship achievements.

Germany and other relatively open countries say Europe has a moral obligation to accept refugees and other EU states must do their part. Eastern European countries in particular argue that a more welcoming stance only encourages more people to make dangerous voyages, and risks attracting an uncontrolled influx of millions.

Under its new rules, Hungary said it will now automatically turn back refugees who arrive by land at its border with Serbia, which it has declared "safe", meaning those crossing from it cannot claim asylum. Asylum claims would be processed within eight days, and those at the Serbian border should be rejected within hours.

“If someone is a refugee, we will ask them whether they have submitted an asylum request in Serbia. If they had not done so, given that Serbia is a safe country, they will be rejected,” Orban was quoted as telling private broadcaster TV2 on Monday.

“We will start a new era," government spokesman Zoltan Kovacs said shortly after midnight on the border. "We will stop the inflow of illegal migrants over our green borders.”

Long queues formed in no-man's land at metal containers built into the fence, where migrants were expected to register, though only a handful were seen entering. They had spent the night in the open, given tents, food and water by aid workers.

Nine Syrians and seven Afghans were detained by police and face possible imprisonment on suspicion of breaching the fence, the first arrests under the new rules.

WE HAVE LOST EVERYTHING

“I don’t know what I will do,” said 40-year-old Riad from Aleppo, once Syria’s commercial hub reduced in many parts to rubble since war broke out in 2011 and put to flight millions of Syrians. “I will wait to see. We have lost everything to reach this point.”

Hungary blames Germany for accelerating the flow of migrants and tearing up European rules by announcing in August that it would take in Syrian refugees regardless of where they entered the EU. Germany has prepared for as many as 800,000 asylum seekers this year, and some senior officials now say even that figure may be an underestimate.

More than 100,000 asylum seekers arrived in Germany in August, and nearly as many have already arrived by train in the first two weeks of this month. More than 460,000 migrants have crossed the Mediterranean this year, more than double the figure from last year.

After tens of thousands of migrants converged on Munich in recent weeks, Germany's government abruptly reintroduced border controls with other Schengen states on Sunday. Austria, Slovakia and the Netherlands swiftly followed suit, and other countries said they were monitoring the situation to determine whether they need to do so as well.

The Schengen system eliminated border controls between 26 European countries, leaving no mechanism to enforce rules which still ban travel by undocumented migrants within the bloc. Countries are permitted to reimpose border checks in an emergency, but have never before done so on the scale unfolding this week.

Germany has been accepting by far the most refugees, with Chancellor Angela Merkel arguing that it is a moral duty, but Berlin has become increasingly exasperated at the refusal of neighbors, especially to the east, to accept quotas.

In a veiled threat, German Interior Minister Thomas de Maiziere said on Tuesday the European Union should consider financial penalties for countries that reject quotas.

"So I think we must talk about ways of exerting pressure," he told ZDF television, adding that some of the countries that opposed quotas were the beneficiaries of EU funds.

The two main routes into Europe are across the Mediterranean from North Africa to Italy, and across the Aegean Sea from Turkey to Greece. Most Syrians use the latter route, then proceed overland across the Balkans to reach the Schengen zone in Hungary, and onwards to seek asylum in Germany or Sweden.

At least 200,000 migrants have crossed into Hungary this year. More than 9,000 entered on Monday, setting a single-day record as they rushed to cross the frontier before Orban's government shut it.

It remains to be seen whether Hungary's new stance will curb the flow across the Balkans, or whether migrants will find other routes to the Schengen zone, possibly via Croatia or Romania.

“We’re on the street now,” said Mouz, a 22-year-old Syrian, who slept on the border. Asked if he might consider another route, he replied: “I don’t know. I’m from Syria. I cannot go back.”

Serbia fears becoming a bottleneck. The government says it is readying more temporary accommodation but will not accept anyone turned back from Hungary.

“That's no longer our responsibility,” Aleksandar Vulin, the minister in charge of policy on migrants, told the Tanjug state news agency. “They are on Hungarian territory and I expect the Hungarian state to behave accordingly towards them.”

The United Nations refugee agency UNHCR disputes Hungary's designation of Serbia as a "safe third country" to which refugees can be automatically returned, saying Belgrade lacks the capacity to accept large numbers.

It said it was "deeply disappointed" at the failure of EU ministers to reach a consensus on the quota plan.

(Additional reporting by Sandor Peto; Writing by Matt Robinson and Peter Graff; Editing by Giles Elgood)