Nick Clegg has challenged David Cameron to face down Tory Eurosceptics by saying on Monday the new eurozone treaty should be "folded into" existing EU treaties.
The deputy prime minister was speaking in London at a summit of EU Liberal leaders he convened in a bid to show his Liberal Democrat party can influence EU policy after Cameron blocked a revision of the Lisbon treaty designed to establish tougher fiscal rules for the eurozone.
He was dismissive of the idea that Cameron had wielded a veto. "The language gets confusing. Veto suggests something was stopped. It was not stopped. Actually something is carrying on which is a different agreement," he said.
Cameron's move in Brussels last month prompted the French and Germans to press for a new treaty outside the formal architecture of the EU which is expected to be signed by most other member states.
Clegg told the audience at Admiralty House, including the Dutch prime minister, Mark Rutte, and the European monetary affairs commissioner, Olli Rehn, the new treaty should be incorporated into the EU's Lisbon treaty – exactly the result that Cameron tried to block. "We believe [the treaty] should, over time, be folded into the existing EU treaties so you don't get a permanent two parallel treaties working separately from each other," he said. "We all see this as a temporary arrangement rather than one which creates a permanent breach at the heart of the EU."
He conceded that Britain would still need safeguards to ensure that a revision of the Lisbon treaty would not jeopardise the single market: "Of course, the UK would want to make sure that the basic building blocks of the single market – a level playing field upon which competition takes place – are properly safeguarded.
"All that was being asked of the United Kingdom in early December and all that would be asked of the United Kingdom any time in the future is not to sign up to anything at all – to simply give our consent that an arrangement like that should be established. The UK has never been asked to give up anything. We were asked, which quite rightly is why the prime minister sought certain safeguards, to consent to the eurozone members agreeing to certain new fiscal disciplines."
But Clegg warned the French president, Nicolas Sarkozy, not to use the new treaty to introduce new governance arrangements for the single market outside the EU. "We don't think it should be drawn to include economic governance. It would be a mistake in our view if we seek to reinvent or duplicate or usurp the single market," he said. "We don't new a whole battery of new instruments and articles and treaties to do what we can do already. We call for this new treaty to focus as much as possible on the fiscal and budget disciplines necessary for the operation of the eurozone itself but not to encroach upon the wider treaty based rules that we've already got."
Emma Reynolds, the shadow Europe minister, said: "It simply isn't good enough to have the deputy prime minister organise last-minute conferences trying to clean up the mess made by the prime minister when he decided to walk away from talks at last month's EU summit. The deputy prime minister acknowledges that this is not the time for 'needless rivalry' - but that is precisely the path his government has chosen. Nick Clegg's efforts are evidence of yet more coalition wrangling rather than a sign of any real progress being made in resolving the crisis in the interests of the country."
