But he blamed French and German "intransigence" and pressure from Eurosceptic Conservatives for putting the PM in "a very difficult position".

Initially Mr Clegg said the coalition was united over the use of the veto. But he told said he had "made it clear" to Mr Cameron it was "untenable" for him to welcome the move.

Sources close to Mr Clegg said he "couldn't believe it" when he was told the summit in Brussels had "spectacularly unraveled".

The prime minister blocked changes to the EU's Lisbon Treaty at an EU summit, arguing that the proposed changes were not in the UK's interest.

It now looks likely that all 26 other members of the European Union will agree to a new “accord” setting out tougher budget rules aimed at preventing a repeat of the current eurozone crisis.