Ministers risk parliamentary defeat if EU rebate is reduced, Straw says

His comments under- lined the vulnerability of Tony Blair's Government after this month's defeat of anti-terror legislation by MPs. His admission came as a majority of EU countries attacked his handling of talks on the EU budget for 2007-13, which he is chairing as part of the UK's presidency of the EU.

Yesterday's clash coincided with a tough line from Gordon Brown, the Chancellor, who said radical reform of the Common Agricultural Policy (CAP) was needed to break the deadlock over the EU budget and world trade talks.

The UK has said it is willing to negotiate on the annual £3bn rebateonly if the CAP is reformed. Yesterday Mr Straw said that all 25 EU countries would have to approve a budget deal and that "this would require primary legislation to go through both Houses of Parliament".

Referring to a deal proposed by Luxembourg and rejected in June, he added: "The Luxembourg proposal was not acceptable to the UK Government and would not have been acceptable to the UK Parliament." Britain will put forward its budget proposals next month, but said they will involve "significant changes" from the June text.

Yesterday it was backed by only the Netherlands and Sweden. Belgium's foreign minister, Karel De Gucht, said the meeting was a "waste of time".

Last night Mr Brown weighed into the debate by saying thatChristine Lagarde, the French trade minister, was "simply wrong" to argue that cuts in farm tariffs would not solve poverty. He said failing to agree on trade would carry "a huge price" for EU reform, prices paid by consumers, Europe's competitiveness, and the world's poor.