Driving licence application forms for people with diabetes are to be rewritten following an intervention from David Cameron and complaints that EU rules on their fitness to drive are both confusing and being too harshly interpreted by UK authorities.

Drivers who need insulin to manage their condition are failing to obtain licences or renew them under a directive that bars them if they suffer two "severe" hypoglycemic attacks from a drop in blood sugar levels within a year.

Some changes to the application forms and guidance will need clarification from Brussels over whether this refers to all such attacks or just those in waking hours.

Another part of the form, issued by the Driver and Vehicle Licensing Agency (DVLA), has been attacked by the charity Diabetes UK for relying too much on the subjective assessment of licence applicants as to how aware they are of the onset of the attacks, which bring on symptoms such as blurred vision, tiredness and loss of concentration.

Cameron attacked what he saw as "pointless new regulation" from the EU in his October Tory party conference speech, adding: "A couple of weeks ago I was up in the flat, going through some work before the start of the day and I saw this EU directive," he said. "Do you know what it was about? Whether people with diabetes should be allowed to drive. What's that got to do with the single market? Do you suppose anyone in China is thinking: 'I know how we'll grow our economy – let's get those diabetics off our roads.'"

His remarks were followed by meetings between Diabetes UK, ministers and the DVLA. The commission has already told MEPs that its experts are looking further at the issue of "waking" and "nocturnal" severe hypos, which it defines as those which need the help of another person to deal with. The DVLA has been applying the directive since last year although Diabetes UK says the form that is causing the problems was only introduced in August.

Nikki Joule, senior policy officer at Diabetes UK, said: "Now that we have raised our concerns at the highest level we are delighted that changes will be made to the forms to ensure the process for drivers with diabetes who are applying and reapplying for licences is fair, consistent, transparent and safe."

People who were scrupulous in filling in forms were finding they were losing their licences, which have to be renewed every one to three years, she said. "The classic case is a middle-aged woman who has been driving for years and reapplying every three years and now not getting a licence." The charity was also seeking to establish how other countries were interpreting the directive.

The DVLA does not yet know how many people have been affected by the changes. It hopes to have figures in the new year and has agreed to issue monthly reports about how many people with diabetes have been prevented from driving. In the UK, up to 300,000 people with type 1 diabetes and up to 700,000 with type 2 need insulin, but not all are drivers.

The agency said: "We must apply European medical standards but we consider every case individually and only refuse licences where absolutely necessary. We regularly review our forms to make sure they are as clear as possible and are pleased to be working with Diabetes UK to ensure all our information on this important subject is well understood.

"We are awaiting clarification from the European commission to confirm our understanding of the interpretation of the minimum standards required by the directive."