After 18 months of negotiation, European leaders decided to defer a decision on a fairer distribution of votes among member states, following the failure of the 15 countries to reach a deal.
The deadlock on sharing votes meant member states were also unable to finalise a new deal on streamlining the European Commission, which had been another key objective of the Amsterdam talks. Failures to reach a deal on these fronts will raise serious questions about the validity of the new Amsterdam Treaty.
One of the key objectives of the latest round of talks, launched to re- write the 1991 Maastricht Treaty, was to re-design European Union institutions in order to prepare for the accession of new EU members from east and central Europe.
However, last night's decision to defer final agreement will smash the hopes of integrationists, and renew doubts about whether Europe is ready to go forward to enlargement.
European heads of government were negotiating the final shape of their new treaty late into the night, as negotiators battled to secure compromises which they would be able to sell to voters back home.
Tony Blair, attending his first full European summit, claimed that he had secured satisfactory deals for Britain on several fronts.
Mr Blair was assisted in his attempts to resist a large-scale move towards wider reduction in veto powers by Germany, which took the initiative in blocking an extension of qualified majority voting over several areas. However, necessary trade-offs inevitably meant that Britain had to give ground in order to agree the final treaty text.
Having gained his prime objective of securing Britain's frontier controls, Mr Blair last night focussed his negotiating skills on preventing a Franco- German plan to gradually build a European defence, and securing a deal to curb fish quota-hopping. Mr Blair claimed that the final treaty text on a common defence had satisfied his demands that Europe's new defence powers be limited to carrying out humanitarian and peace-keeping tasks.
The Prime Minister also won agreement from his partners that no moves to pool defence decisions would undermine the pre-eminence of Nato.
However, Britain was forced to give some ground in the defence debate, accepting that the Western European Union, Europe's de-facto defence arm, could, over time, be "integrated" into the EU structures. The Government would have preferred to have kept the word "integration" out of the final agreement altogether, but Franco-German pressure appears to have forced the concession.
As the treaty negotiations came to a head last night, British negotiators announced that a side agreement had been finalised with the European Commission, giving new guarantees that fish quota-hopping can be curbed.
Announcement of the agreement could help Mr Blair to sell the overall Amsterdam package to the House of Commons, where he will outline the outcome of the treaty talks today.
However, there was widespread disagreement last night about whether the agreement was legally binding. Spain has not been a party to the agreement and could still challenge such a deal in the European Court.
Jacques Santer, the European Commission President, has accepted British proposals under which all vessels fishing the British quota must in future land 50 per cent of their catch at British ports. Furthermore, the agreement states that fifty per cent of the fishermen on such vessels must be of British origin.
The deal is framed to deter foreign fishermen from taking over British quota licenses.
The late-night negotiations revealed just how far apart member states remained on several core issues raised during the Amsterdam negotiations.
The package of reforms is certain to be seen by integrationists as a minimalist package, which falls far short of the objectives set out by Helmut Kohl, the German Chancellor, for a leap forward towards political union.
However, important further power-sharing has been agreed in asylum and immigration policy. Areas set aside for further discussion, such as the institutional questions, could bring calls for another treaty revision before Europe moves ahead towards enlargement to the east.