LONDON (Reuters) - Britain's Trade Remedies Authority (TRA) recommended on Tuesday that country-specific quota caps should be imposed on certain categories of steel imports to help defend its domestic industry, which said the proposals were insufficient.

Britain has been trying to protect its domestic industry from a global oversupply of steel, and since the start of last year has extended safeguards for the domestic sector and maintained anti-dumping measures on some imports from China.

The TRA's latest recommendation is for quota caps to come into force in October this year, limiting how much steel some countries can import tariff-free.

TRA chair Nick Baird said the recommendations would "help protect the UK steel industry from the destabilising impact of global overcapacity".

The TRA's review into steel was broadened in March after U.S. President Donald Trump announced a 25% tariff on the sector.

Britain last week clinched a deal to remove those tariffs, though the two sides must still formalise the agreement, leaving sector representatives unclear when levies will go.

The U.S. steel tariffs remain in place on other countries, meaning there is more steel in the market that might end up being diverted to Britain.

The future of the UK steel sector has been in some doubt, and the government last month intervened to seize operational control the country's last maker of virgin steel.

Under Thursday's recommendations, three categories of steel - UK imports of which are dominated by Vietnam, South Korea and Algeria respectively - will be subject to caps that mean each country can only supply 40% of the residual quota. Any imports beyond that will be subject to a 25% tariff.

The TRA also recommended scrapping the ability to "carry over" unused quarterly quota into the next quarter from July. The recommendations are subject to further review and government approval.

But UK Steel said the measures did "little to effectively defend the UK steel industry from the vast amounts of surplus steel looking to be offloaded onto our shores".

"It is now time for government to step up and swiftly replace ineffective steel safeguards with a robust trade defence mechanism of quotas designed to suit the reality of the market and the world today," said UK Steel Director-General Gareth Stace.

(Reporting by Muvija M, Alistair Smout and Catarina Demony. Editing by Mark Potter)