German Chancellor Angela Merkel has said today she is prepared to work towards a political union in Europe with willing partner countries even if that meant a two-speed approach.

"We need more Europe .. a budget union .. and we need a political union first and foremost," Ms Merkel told German public television. "We must step by step cede responsibilities to Europe."

She added that the upcoming EU summit will not resolve all the euro zone problems.

The German leader, who has been criticised for staunch opposition to some proposals to resolve the euro zone debt crisis, added: "We must not remain immobile because one country or another does not want to follow yet."

On Wednesday, Mrs Merkel discussed the debt crisis with US President Barack Obama and Italian Prime Minister Mario Monti in the latest in a series of calls with global leaders.

British Prime Minister David Cameron also called on Europe Wednesday to come up with an "immediate plan" to resolve the euro zone crisis. Mr Cameron will meet Mrs Merkel for further talks in Germany later today.

Leaders are under intense pressure from their populations as well to take action to break the back of the two year old crisis at a June 28-29 summit.

But Mrs Merkel told German television that not all of the bloc's problems could be solved with one summit meeting.

The German chancellor said she did not believe "that one summit is capable of settling everything in one fell swoop."

UK wants safeguards - Osborne

Britain will want to ensure safeguards are in place to protect its financial sector if the euro zone moves towards establishing a banking union, British finance minister George Osborne said today.

In an interview with BBC Radio 4, Mr Osborne also urged the single currency bloc to use its bailout fund to recapitalise Spain's troubled banks.

"There is no way that Britain is going to be part of any euro zone banking union," Mr Osborne said.

"I think Britain will require certain safeguards if there is a full blown banking union."

European financial transaction tax proposals

Germany's government and main opposition have agreed the outlines of a proposal for a European financial transaction tax today, which could pave the way for parliament to approve a fiscal pact and permanent rescue scheme for the euro zone.

Two lawmakers, one from Chancellor Angela Merkel's coalition and one from the centre left, said the deal had been reached by a parliamentary working group and would be discussed by leaders of the parties next Monday.

"We have reached a breakthrough. The paper proposed by the finance ministry is a path to agreement on the main points," a senior MP from Mrs Merkel's Free Democrat (FDP) coalition allies, Volker Wissing, said.

Joachim Poss from the main opposition Social Democrats (SPD) said the paper was an important step towards reaching agreement on the financial transaction tax. The SPD has linked progress on the financial transaction tax to their approval for Mrs Merkel's fiscal compact and the European Stability Mechanism.

Germans see crisis worsening, euro surviving - poll

In a survey published today, a majority of Germans expect the euro crisis to worsen but think it will have only a little impact on their personal wealth and they believe the common currency will survive.

The ARD-Deutschlandtrend survey also confirmed German exasperation with Greece, with more than four fifths saying the country should leave the euro zone if it does not accept the terms of European Union-International Monetary Fund bailouts.

The survey, which canvassed 1,001 Germans on Monday and Tuesday, coincides with a renewed wave of alarm in global financial markets over the euro's prospects ahead of a Greek election and amid Spain's efforts to rescue its battered banks.

The poll findings suggest Germans - whose economy has been booming - remain relatively unscathed by the crisis ravaging debt-choked southern Europe but also highlight Chancellor Angela Merkel's limited political room for manoeuvre on Greece.

Nearly 80% of those surveyed expect the debt crisis to deteriorate but 70% believe the euro will endure, the poll showed, even though more than half also said they wished Germany had retained the Deutschmark.

56% of Germans polled believe the euro crisis will impact their personal wealth "a little" in the long term while 27% said it would "clearly affect" their wealth.

16% thought the crisis would not affect them.

A hefty 83% said Greece should quit the euro zone if it fails to abide by decisions linked to its bailouts.

Greece holds its second election in two months on June 17 and a radical leftist party opposed to the austerity policies imposed under the bailouts may emerge as the largest party, raising the risk of a debt default and an exit from the euro.

A separate poll this week showed 49% of Germans want Greece to leave the euro zone while 39% want it to stay.

Nearly two thirds wanted Angela Merkel to keep insisting that Athens stick to the agreed austerity measures.