Greek debt crisis: No British money will be used for bailout, says George Osborne

Responsibility for bailing out eurozone countries is supposed to fall on member states using the single currency, according to the Conservatives

British taxpayer money will not be used as part of the latest effort to rescue the Greek economy from collapse if George Osborne has anything to do with it (Getty)

George Osborne will not use £850m of taxpayers' money as part of any attempt to rescue the Greek economy from collapse, Treasury sources have said.

The Chancellor is said to have made clear that ignoring a 2010 agreement by using the EU budget as collateral against short-term loans for Athens is a "non-starter" in a series of telephone conversations with counterparts ahead of a meeting in Brussels on Tuesday.

"Our Eurozone colleagues have received the message loud and clear that it would not be acceptable,” a Treasury source told The Telegraph.

European Commission president Jean-Claude Juncker is reported to be seeking to turn back to the European Financial Stabilisation Mechanism (EFSM) to help Athens while a new bailout is agreed.

But back in 2010 David Cameron declared he had won a "clear and unanimous agreement" that an EU-wide emergency fund would no longer be used to underwrite bailouts of struggling Eurozone countries.

That responsibility was supposed to fall on member states using the single currency, although the deal struck by the Prime Minister was not legally binding.

The UK pays around 14 per cent of the EU budget so if it was used to secure 8.6 billion euros in loans to Athens, it could expose the treasury to around £850 million of liabilities in the event of a default, the Daily Telegraph said.

A Treasury source said: "Our eurozone colleagues have received the message loud and clear that it would not be acceptable for this issue of British support for eurozone bailouts to be revisited.”

Meanwhile in Greece, leaders face the challenge of pushing a massive austerity package through their parliament, agreed after 17 hours of negotiations in Brussels, amid angry talk of a German “coup” and the first signs of a popular backlash on the streets of Athens.

The country’s Prime Minister, Alexis Tsipras said: “I think the vast majority of the Greek people will support this … because they understand that we have given our best to the bitter end,” he said.

Following all-night talks in Brussels with the leaders of the 19-nation eurozone bloc, Mr Tsipras added that he had managed to fend off the "most extreme measures" demanded by Greece's creditors.

He must now win the backing of the parliament in Athens for fresh pension, market and privatisation reforms less than two weeks after the Greek people overwhelmingly rejected further austerity in a referendum.