British prime minister today David Cameron today defended his decision to veto in EU treaty changes in Brussels last week.

Mr Cameron said he remained committed to Britain’s membership of the EU. “Britain remains a full member of the European Union and the events of last week do nothing to change that,” he said.

“Our membership of the EU is vital to our national interest.” The prime minister insisted the safeguards he sought were “modest, reasonable and relevant” and were designed to ensure a “level playing field” for the country's financial sector.

“Satisfactory safeguards were not forthcoming so I didn’t agree to the treaty,” he said. “It was not the easy thing to do but it was the right thing to do.”

He was strongly criticised by Labour leader Ed Miliband who said using a veto, to try and block an initiative that went ahead anyway, was not protecting Britain’s interests, it was being defeated.

He said the veto was the result of a failure by his 19-month-old government to build alliances in Europe to protect the UK and was more about splits in his own party than the British national interest.

Mr Miliband said: "He didn't want a deal because he couldn't deliver it in his party. This is a bad deal we ended up with for bad reasons and it will have lasting consequences.

"We will rue the day this prime minister left Britain alone, without allies, without influence. It's bad for business, it's bad for jobs, it's bad for Britain."

Earlier, the European Commission warned that Mr Cameron’s veto over EU treaty changes will not save the City of London’s bankers and financial corporations from tougher regulation.

EU economics commissioner Olli Rehn, welcoming the new “fiscal compact” agreed by the other 26 member states at last Friday’s summit, said: “I regret very much that the United Kingdom was not willing to join the new fiscal compact, as much for the sake of Europe and its crisis response as for the sake of British citizens and their perspectives.”

He went on: “We want a strong and constructive Britain in Europe, and we want Britain to be at the centre of Europe, and not on the sidelines.”

Mr Rehn was announcing the entry into force tomorrow of a so-called “six-pack” of tougher economic monitoring and surveillance on all European economies, to which the UK had agreed and remained subject to, insisted Mr Rehn.

The “fiscal compact” agreed at Friday’s summit by the other 26 added tougher measures and sanctions, and sanctions did not apply in the UK.

But Mr Rehn made clear that regardless of Mr Cameron blocking formal treaty change at the summit, existing rules via the single market did apply.

The commissioner said: “If this move was intended to prevent bankers and financial corporations in the City (of London) from being regulated, that is not going to happen. We must all draw lessons from the financial crisis and that goes for the financial sector as well.”

He continued: “I would also like to remind you that the UK government has also supported and approved the six-pack of new rules tightening fiscal and economic surveillance which enters into force tomorrow.

“The UK’s excessive deficit and debt will be the subject of surveillance like other member states, even if the enforcement mechanism mostly applies to the euro area member states.”

Serious cabinet disagreements have been laid bare in the British government on the issue with Mr Clegg revealing he was “bitterly disappointed” with the prime minister’s use of the veto in Brussels last week.

Mr Rehn said the “intergovernmental” agreement at the summit to introduce a “fiscal compact” among 26 countries and bypass Mr Cameron’s treaty change veto was “bold, effective and legally viable”.

The outcome was “a major milestone in Europe’s economic governance”. He went on: “Of course, we would rather have had a treaty of 27 and not only 26.

“I regret that we could not, but we now have this fiscal compact of 26, which marks another step in the economic discipline of the European Union.”

Mr Cameron had claimed the deal without the UK lacked the necessary authority of EU institutional backing, including the commission to implement the new measures and the European Court of Justice to enforce them.

But Mr Rehn insisted: “I am happy that the role of the institutions was recognised and reinforced. The speculation of some media that the treaty is not enforceable is unfounded. The result we got at the summit was better than some suggested - bold, effective and legally viable.”

The only area which may be more difficult to implement because the summit deal was not enshrined in a unanimous treaty change, would be the imposition of automatic penalties on euro zone member states.

Meanwhile, French president Nicolas Sarkozy said the legal basis of a new accord to enforce debt and deficit rules in the 17-nation euro area would be worked out before Christmas.

"In the next fortnight, we will put together the legal content of our agreement. The aim is to have a treaty by March," Mr Sarkozy told newspaper Le Monde in an interview.

"You have to understand this is the birth of a different Europe - the Europe of the euro zone, in which the watchwords will be the convergence of economies, budget rules and fiscal policy. A Europe where we are going to work together on reforms enabling all our countries to be more competitive without renouncing our social model," he said.

Agencies