David Cameron is struggling to deliver the hardline policy on Europe on which he fought last year's Tory leadership election and may kick his plan into the long grass.
Mr Cameron wooed Tory Eurosceptics by promising to pull the party's MEPs out of the main centre-right group in the European Parliament, the European People's Party. But the Tories have not yet found enough allies to form a credible breakaway group and the party leader now has his first major policy headache.
William Hague, the shadow Foreign Secretary, will announce the Tories' next moves next month but insiders admit one option will be to announce further negotiations to be concluded in the long rather than short term. The Cameron plan suffered a setback when two potential partners, in Poland and the Czech Republic, became embroiled in a bitter row. The Tories have also held talks with a Dutch fundamentalist party which bans women candidates.
Tory MEPs are split on the issue, with pro-Europeans warning the party will lose influence in the parliament.
A Tory spokesman denied Mr Cameron's policy would be dropped. Mr Hague, who struggled to explain the policy yesterday, said: "We have not abandoned it in any way and I expect to make an announcement by the end of July."
In a speech last night, Mr Hague sought to bury the Tories' backward-looking "us and them" attitude towards Europe by setting out a forward-looking agenda on the EU's role in the world.
He told the Open Europe think tank: "I am a firm believer that Britain's place is in the European Union, a strong player in Europe, not at the margins. But that does not mean that we should abandon our critical faculties in examining the EU's predicament. We need a realistic assessment of the EU's successes and failures to decide what the EU needs to do more of, and what it should stop doing."
Tony Blair ridiculed Mr Cameron's policy, saying: "It would be a gross error of judgement and leadership to leave the mainstream groupings in Europe. It would marginalise the party in Europe. If ever they were to be the government, it would marginalise the government."