David Cameron faces a new Commons showdown with the Tory Right over Europe tomorrow as it joins forces with Labour to press for cuts in the EU budget.
Downing Street made clear he was not going to bow to their demands – which it regards as unrealistic – to support a reduction in spending by Brussels between 2014 and 2020.
Mr Cameron, backed by his Liberal Democrat deputy Nick Clegg, is now preparing for a test of strength over the issue at Westminster in a vote tomorrow. In an attempt to limit the scale of the backbench rebellion, Tory MPs will be whipped to oppose demands for a real-terms cut in EU spending.
The vote has been given added significance by the decision by the Ed Balls, the shadow Chancellor, and the Labour leadership to support a cut.
Chris Leslie, the shadow Treasury spokesman, said: "When there are so many swingeing cuts at home, we do want a real-terms reduction and anything above inflation should not be prioritised."
The Government is already at odds with major EU countries, including France and Germany, which favour an above-inflation rise to the EU budget, by arguing for a real-terms freeze.
But the Tory MP Mark Pritchard, who played a prominent role when 81 rebels voted for a referendum on Europe last year, challenged Mr Cameron to go further and show "real fiscal leadership" by wielding Britain's veto on EU spending.
He said: "At a time of fiscal restraint for both families in the UK and families throughout the EU, it is unacceptable that there should be any increase in the EU budget."
Mark Reckless, another Conservative MP, said: "Some real-terms reduction is surely not an unachievable or excessively radical goal, given the extent to which we and other EU countries are making less palatable cuts at home."
Downing Street sources last night insisted demands for a cut were unrealistic. "We are taking a tougher position – at least publicly – than anyone else is in Europe and we believe it is a deal that can be done. A real-terms cut is never doable in a million years," one said. "This is short-term opportunism and parliamentary game-playing by Labour."
Government sources played down the significance of tomorrow's Commons vote, stressing that it was not binding on Mr Cameron.
Final decisions on the EU budget will be taken in Brussels on 22 November. The European Commission has proposed a five per cent annual increase. Mr Cameron has accepted it should be linked to inflation.