Plans for a cap on the number of European migrants coming to Britain were dropped by David Cameron just 48 hours before they were due to be unveiled after protests by Angela Merkel, Government sources say.

The German Chancellor is in London today for talks with the Prime Minister – and has decided not to meet Labour leader Ed Miliband.

She was vehemently opposed to the idea of an ‘emergency brake’ that could be applied if EU migrants exceeded forecasts.

Angela Merkel was vehemently opposed to idea of an 'emergency brake' that could be applied if EU migrants exceeded forecasts and David Cameron dropped the plans just 48 hours before they were due to be unveiled

One senior source said the proposal had been included in drafts of a speech by Mr Cameron late last year until a ‘very late stage’.

Another official confirmed the proposal had been ditched from the speech setting out his plans for EU reform – 48 hours before it was delivered.

Mr Cameron used his long-awaited remarks to set out plans to limit the numbers of people taking advantage of the EU’s right to free movement to come to Britain.

He warned Britain’s future in the EU is at stake unless Brussels acts to tackle immigration, suggesting that he will back a British exit unless he gets what he wants.

The Prime Minister proposed curbs on tax credits, child benefit, jobseeker’s allowance, housing benefit and council housing for incomers.

The payment of out-of-work benefits will be stopped altogether, while tax credits, which top up low paid wages and are seen as the major ‘pull factor’ for immigrants from the Continent, will only be paid to people here and paying in for four years or more.

Mrs Merkel is understood to have indicated she is prepared to back proposals for strict limits on migrant access to benefits and public services

But some Eurosceptics were dismayed that Mr Cameron omitted any mention of an even more ambitious plan for an annual quota or an ‘emergency brake’ on EU migrants.

Mrs Merkel is understood to have indicated to the Prime Minister that she is prepared to back his proposals for strict limits on migrant access to benefits and public services.

British officials hope the German leader will signal support for new rules to persuade British voters to vote ‘in’ in a referendum on EU membership planned if Mr Cameron remains in Number Ten after May’s general election.

However, she is thought to have warned the Prime Minister that she is prepared to let Britain leave the EU rather than give ground on its founding principle of free movement.

The disclosure that the idea of an emergency brake was dropped from Mr Cameron’ s speech at such a late stage, following warnings from Germany, is likely to further anger some Conservative MPs.

Chancellor George Osborne is also said to have been firmly against seeking to negotiate such a system, which was supported by some senior Cabinet ministers.

A Downing Street source insisted that while emergency controls that could be applied if numbers of incomers exceeded predictions had been explored, they were deemed ‘unworkable’.

Forecasts would have been determined by the European Commission and set too high because of other countries – including Germany, whose population is shrinking – want more migrant workers than Britain, the source said.

‘We could have ended up with a very complex system, determined by Brussels, which was never triggered,’ he added. ‘Our focus is on the in-work benefits like tax credits which act as a very big economic incentive to people to come to this country.’

Arch-Eurosceptic MP Sir Bill Cash warned Britain would be unable to reduce the level of immigration from the European Union without imposing a cap on numbers.

‘Our economy is doing pretty well, and actually that means more people are going to come in. Therefore the cap is really the key question, and if you don’ t have a cap then it won’t work… unfortunately that seems to have been abandoned,’ he said.

As well as EU reform, Mr Cameron and Mrs Merkel are today expected to discuss how best to secure growth and tackle the instability in the global economy.

Mr Cameron and Mrs Merkel are today expected to discuss how best to secure growth and tackle the instability in the global economy

Britain and Germany are the two fastest growing major economies in Europe, and have pursued similar approaches in recent years – cutting spending, implementing structural reforms and calling for a more competitive, business friendly European Union.

Ahead of their meeting, Mr Cameron and Mrs Merkel said in an unusual joint statement: ‘We must do more to make the EU more stable and competitive than it is today. We have both taken steps at home to consolidate our public finances and it is important that we continue to pursue this long-term plan.

The German Chancellor has decided not to meet Labour leader Ed Miliband (pictured) today

‘We must do more to harness the potential of the single market and reduce regulation that is hampering business. We must also dismantle further barriers to trade, in particular by agreeing an EU-US trade deal in 2015.’

Labour sources said they were ‘irritated’ that Ed Miliband will have no meeting with the German Chancellor, blaming the Government for not telling his office that Mrs Merkel was coming to London.

Government sources said opposition leaders were always only informed in advance of official state visits by foreign leaders, unless they indicated they wanted to meet them.

Labour’s shadow Europe minister Pat McFadden said Mrs Merkel ‘will no doubt be publicly supportive of Britain’s continued membership of the European Union’ during today’s visit.

‘But in private her message to David Cameron may be a little different. She will of course urge him to keep Britain inside Europe, but she is also likely to reflect German concerns that there is a danger of him and his party expecting too much of Germany, and she will make clear that Britain has responsibilities of its own,’ he added.

‘Merkel’s warning last year that the principle of free movement was for her non-negotiable was a clear and deliberate signal to Cameron. But beyond issues of principle there are also practicalities.

'Put bluntly, Germany does not believe that it should simply be expected to bail out the periphery of Europe financially and Cameron politically.