1. Recent reforms in the Common Agricultural Policy aim for a greening of the subsidy system with potential improvements for biodiversity conservation. As part of that process, the tree density limit for pastures to qualify for European Union subsidies has been increased from 50 to 100 trees per hectare. However, recent studies show that the high biodiversity values of these habitats may be threatened by these limits, highlighting the need for policy improvements. Still, little is known about the direct effects of tree density limitations on bird communities in woody pastures. 2. We investigated how bird diversity and species composition are affected by tree density in 49 Swedish woody pastures along a gradient of 4-214 trees per hectare. We recorded bird communities, tree density and stand structure estimates in the field and estimated forest cover in the surrounding landscape from aerial photos. Using generalised additive models and redundancy analysis, we analysed how bird territorial species richness, bird abundance and species composition are affected by tree density, taking into account other local and landscape scale explanatory variables. 3. Tree density had a significant positive effect on bird species richness at low tree densities and species richness saturated at approximately 50 trees per hectare. Shrub density had a significant positive linear effect on both bird species richness and abundance. Tree and shrub density were also the major drivers of bird community composition, with secondary effects of tree species diversity and landscape forest cover. 4. Policy implications. Our results show that tree density is not the limiting factor, but rather a driver of bird diversity and species composition in woody pastures and that tree density limits may fail to capture the whole range of biological values. To improve policy recommendations, we therefore stress the importance of considering additional social-ecological drivers associated to management quality, e.g. taking into account moral and cultural motivations among farmers, to preserve biodiversity in woody pastures.