Brown pledges EU referendum if Blair talks fail

However in a swipe at British demands for exemptions from more EU policies, European Commission president Jose Barroso said opt-outs could not become the rule in the Union, or else the bloc would eventually fall apart.

The Chancellor stressed today that he was confident the Prime Minister would refuse to give up key powers over foreign policy and crime at his final Brussels summit. Mr Brown predicted that "we will get what we need" to protect the UK's position.

No10 has claimed it would not hold a referendum on any amending treaty that emerged from the meeting. But Mr Brown told GMTV today he was open to the idea of a vote should Brussels win greater powers over key areas.

Mr Blair is having a video-conference with French president Nicolas Sarkozy this afternoon. Mr Sarkozy's spokesman said several states are still highly reticent about agreeing this week to a simplified treaty reforming EU institutions.

"The reticence of several of the players is still strong," Sarkozy spokesman David Martinon said.

However Mr Brown predicted that "we will get what we need" to protect the UK's position.

The PM said he would lay down four "red lines" marking where the UK would keep control of its policies at a crucial two-day EU summit starting on Thursday.

But critics said he will agree a new EU constitution that will reduce the UK's ability to block controversial EU legislation by 30 per cent.

Tory Europe spokesman Mark Francois said the "red lines" were a ploy to divert attention from a surrender of powers, adding: "What Tony Blair did not say is more important than what he did say. These are not so much red lines as red herrings."

In another blow to the UK's sovereignty, France and Spain put forward proposals to rob nation states of a veto in 51 policy areas - far wider than Mr Blair's four no-go areas.

The Chancellor has warned Mr Blair that the results of this week's summit must be put to a referendum in Britain if there is a fundamental change. But the Premier has insisted no vote was needed.

Mr Blair said he would not give up British control of labour laws, foreign policy, justice and home affairs, and tax and social security.

But the Franco-Spanish plans would resurrect most of the failed constitution, including a permanent EU president and foreign minister and changes to criminal law that could affect the UK's right to deport terror suspects.

The European Court of Justice would become the highest criminal court for Britain, giving EU judges the final say in cases here.

No. 10 said the PM was ready to plunge the EU into a fresh crisis by refusing to sign up to a deal that weakened Britain's position.

Mr Blair told senior MPs: "Europe needs to work more effectively. What it does not need is a constitutional treaty. If we achieve those four objectives, I defy people to say what it is that is supposed to be so fundamental that could require a referendum."

European Commission President Jose Manuel Barroso said today he is confident EU leaders will reach a deal this week on a slimmed-down treaty to replace the bloc's draft constitution.

"It will be possible to reach an agreement," Barroso told reporters. "We are going to end up with a solution," he said.

Failure, he added, was not an option. The European Union would lose credibility and its business would be set back if its leaders fail to agree this week on a reform treaty, he said.

"Failure would set back our work across the board. All the progress of the last year would be at risk," he said.

New east European members of the European Union must show they are not making the bloc's life harder and avoid reopening past agreements on voting reform, he added.

"I believe ... it would be in their interest for them to show that their membership of the EU is not making the union's life more difficult."

Barroso said it was the first time all 27 member states had taken part in such a negotiation and it was vital to demonstrate that the enlarged union was capable of taking important decisions.

"We are not in favour of reopening the very carefully designed balances on the institutional matters specifically on voting, because we believe this could reopen many other issues," he said in reference to Poland's demand for a re-weighting of votes.