The study of magnetic and magnetotransport properties of the crystals of (La 1-yEu y) 0.7Pb 0.3MnO 3 system has been carried out. Eu ions enter the crystals being in trivalent nonmagnetic state. Europium ions possessing of smaller ionic radius in comparison with La ions, induce local distortions of Mn-O-Mn bonds in the system that cause random distribution of magnetic exchange interactions in magnitude and, probably, in sign. The competition of magnetic interactions leads to the appearance of the inhomogeneous magnetic state in the crystals. The enhancement of concentration of Eu ions results in decrease of the Curie temperature and broadening of the inhomogeneous magnetic state area. At y=0-0.4 the coexistence of the paramagnetic phase with conductivity of the polaronic type and the ferromagnetic metallic phase is observed in a bounded temperature interval both above and below TC. Below TC the increasing of y up to 0.6 induces the magnetic state representing the coexistence of two different FM phases. These phases are spatially separated due to frustration of FM and AFM exchange interactions on phase boundaries. Above TC, up to 1.6 TC ferromagnetic clusters exist in a paramagnetic matrix similar to the case of samples with y=0-0.4. Concerning electric properties, the samples with y=0-0.4 reveal the metal-insulator transition at temperature that practically coincides with TC. The sample with y=0.6 has conductivity of insulator character up to the lowest temperatures. For all investigated compositions y=0-0.6 the CMR effect is observed in the area where the inhomogeneous magnetic state exists. The effect is determined by different conductivity of the coexisting phases, as well as by sensitivity of the inhomogeneous state to external magnetic field.