William Hague today called for individual nation states to be given powers to block unwelcome laws from Brussels.
The Foreign Secretary outlined plans for a new "red card" system for national parliaments that would result in greater democratic accountability from the European Commission.
It is the first explicit request of Europe from the Tory-led UK Government since it announced plans to hold an in-out referendum in 2017.
In a speech to a foreign policy think-tank in Germany, Mr Hague said national parliaments should be able to overrule unwanted legislation coming from the European Union.
He told the Konigswinter Conference that it was time "to make the EU more democratically responsive".
He said: "Trust in the institutions is at an all-time low. The EU is facing a crisis of legitimacy."
Mr Hague asked the audience: "How can we build a European Union that acknowledges and respects the diversity of its member states? One that recognises that our national approaches to and ambitions for the European Union may sometimes differ?
"I think instead that the solution lies in promoting the role of national institutions in European decision-making - because ultimately it is national governments and national parliaments that are accountable to our electorates. They are the democratic levers voters know how to pull."
He said that only by devolving powers to national MPs, rather than MEPs, will Europe be able to restore the democratic deficit.
The proposed "red card", would be an extension of the little-known "yellow card" system already in place.
At present, parliaments in member states can issue a "yellow card" to the European Commission, forcing it to reconsider a law. The introduction of the "red card" would altogether thwart any EU legislation deemed inappropriate.
As with the current system, Mr Hague's proposal would require a minimum number of national parliaments to have effect.
The Foreign Secretary warned that only by reshaping the way the decisions are made in Brussels will Britons be able to see themselves tied into a long-lasting relationship with the EU.
He described the frustration many Britons feel about Europe.
"Too often, the British people feel that Europe is something that happens to them, not something they have enough of a say over. That the EU is happy speaking but does not seem interested in listening. That the EU is sometimes part of the problem, not the solution," Mr Hague said.
"They do not understand why Brussels has to interfere in how long junior doctors can work. Or why someone from another member state should be able to continue to claim benefits in the UK even after they have moved back to their own country.
"I think we are all relieved that the European Commission is not going to ban Europeans from using olive oil jugs at restaurant tables. But it is extraordinary that such a decision should be within the EU's power in the first place."
Mr Hague is confident of securing backing for his proposals from other Northern European countries, including Germany.
He said the Prime Minister "will campaign for such an arrangement with all his heart and soul" and that the UK Government was keen to "get on with the business of delivering that reformed EU".
He warned that reform was "badly needed", adding "I do not think the EU will be democratically sustainable without them."
In his speech, called Britain and German: Partners in Reform, Mr Hague set out four key areas where he said work is needed.
As well as outlining the Tory view of a renegotiated relationship between Britain and Europe, Mr Hague said deepening the single market in order to improve competition, creating a business-friendly regulatory framework and building new trade partnerships were among the key challenges the EU had to surmount.
Mats Persson, of the Open Europe think-tank, welcomed the move. But he warned that the British public would only back the idea if the Government demonstrated it was actively pushing for change now rather than later.
Mr Persson said: "Allowing national parliaments to block unwanted EU laws would go a long way to bring back democratic accountability over EU decisions.
"However, whilst it's encouraging that the UK government is looking at this, it must press ahead with this reform now to avoid the impression that it has no immediate strategy in Europe - a charge that's becoming more frequent. There's support for this reform in other parts of the EU."
Mr Hague was critical of the then-British prime minister Tony Blair in 2000 for surrendering many of Britain's vetoes by signing up to the Nice Treaty.
Speaking as Conservative Party leader, Mr Hague argued at the time that Mr Blair had "signed away" Britain's veto in 23 areas, giving European institutions an opportunity to impose further integration against Britain's will.
The Nice Treaty paved the way for qualified majority voting, meaning that in the absence of a unanimous agreement the European Council could accept a system of weighted votes instead.
A spokesman for Douglas Alexander, Labour's shadow foreign secretary, welcomed the news.
"Labour would seek to agree a mechanism for ensuring that national parliaments have more of a say over the making of new EU legislation."
Speaking at Chatham House in January, Mr Alexander called time on the yellow card system, saying Labour would extend it to include an "emergency break" for national parliaments on making EU laws.