Cameron to risk backbench wrath as he gives up power struggle with Brussels

David Cameron will put the urgent need to secure a rescue deal for the euro ahead of demands by Conservative MPs for Britain to grab back powers from Brussels.

His stance will anger hardline Eurosceptics in his own party, who will step up their pressure on the Prime Minister to exploit the opportunity of negotiations on a new European Union treaty to win concessions for Britain. They will also demand a referendum on the treaty if other EU members such as Ireland call one.

Mr Cameron's position is a recognition that he has limited bargaining power because the UK is outside the single currency – and that submitting a long shopping list in the talks would get short shrift from the other 26 EU members.

British officials said last night it was still unclear precisely what sort of treaty Germany and France have in mind to enforce budgetary discipline for the eurozone countries.

An EU leaders' summit in Brussels next week will discuss whether the reforms should require approval by all 27 EU members including Britain or merely the 17 using the euro.

It is believed that Mr Cameron would prefer a limited change among the 17, which would reduce the pressure on him to call a referendum and make "gains" in the negotiations.

Allies insist he is not shying away from such a battle, but that he believes the top priority for Britain is to see the eurozone turmoil finally brought to an end.

A smooth and quick agreement among the 17 would have a much better chance of restoring confidence in the financial markets, he argues, than a long negotiation among 27 members on a new EU blueprint.

After talks in Paris yesterday with Nicolas Sarkozy, the French President, Mr Cameron made clear that reforms to the eurozone could be achieved without a full-scale treaty change.

He said: "When you look at the crisis in the eurozone, the real need there is for the institutions of the eurozone to get behind the currency to convince the markets that they have the firepower to do that. The second fundamental thing is real competitiveness throughout the eurozone so the eurozone works properly.

"Neither of those things actually requires treaty change but I am very clear if there is treaty change, then I will make sure that we further protect and enhance Britain's interests."

The Prime Minister insisted that Britain still had influence in the EU's debate. "We are one of Europe's major economies, we are a big player in the single market, we want growth on the European continent to help the British economy, we want to drive change in the single market to help drive that and yes, we want to help resolve the crisis in the eurozone," he said.

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