Germany threw down the gauntlet to Britain yesterday over one of the issues that will dominate a crucial EU summit starting today in Brussels. Addressing one of Tony Blair's "red line" subjects, the Germans made clear they want the so-called charter of fundamental rights to be legally enforceable as part of a new deal on how Europe is run.

The charter is a comprehensive catalogue of human, civil and social rights agreed by the EU in 2000 but never enforced. Though it will not be at the heart of any new treaty, the German government, chairing the summit, said it should still be referred to as "legally binding".

Both Mr Blair and Gordon Brown are flatly opposed to the charter becoming European law, and thus enforceable by the European court of justice.

"It's a proposal from the [German EU] presidency and it does indeed contain a proposal to make the charter legally binding," said a senior Berlin government official closely involved in planning the summit and drafting the new treaty. The case for the charter was overwhelmingly supported by the rest of the EU, he added. "Some see that as a concession because they want it in the treaty. They absolutely insist on the legally binding charter."

The charter enshrines everything from the right to strike to the right to preventative medical treatment. EU trade unionists demonstrated in Brussels in support of it yesterday, but it is strongly opposed by Britain's business leaders and the government has said it will not tolerate any European interference in the UK's social and labour law.

The charter formed chapter two of the proposed European constitution that died two years ago after France and the Netherlands voted against it.

Signalling a possible way out of the impasse, however, the German official also acknowledged that Britain's common law system made the UK a special case in the EU, and indicated that the German chancellor, Angela Merkel, could negotiate terms exempting the UK from the charter's application. A senior commission official said: "The Germans have told the UK that opt-outs can be organised."

The constitution was officially buried on Tuesday night in Brussels when Mrs Merkel's team tabled a mandate for a new reform treaty which seeks to salvage much of the constitution, minus its symbolic and solemn trappings. "We need to mutilate the constitution in order to save it," said another senior German official.

German officials hope that, if consensus can be reached, the treaty will be accepted at the summit scheduled for today and tomorrow, but which is expected to run into Saturday. EU government officials would then meet for a couple of months in the autumn to dot the i's and cross the t's in the new treaty.

The new pact would reshape the way the EU is run by giving it a full-time president, a European foreign policy supremo, a slimmed down commission, and a new "double majority" voting system based on a country's population size, which will raise Germany's clout relative to other members for the first time.

The latter change is seen as the biggest threat to a summit triumph for Mrs Merkel because Poland, wary of German domination, is demanding to reopen the issue of voting weights.

Other British sore points include the role and powers of a European foreign minister (who would be called something else), and the surrender of Britain's veto on criminal justice and home affairs.

British officials admit that reaction to Downing Street's demands among other EU states this week has been "vituperative". But diplomats in Brussels yesterday characterised the German proposals as a shrewd piece of drafting that appeared to leave enough flexibility to secure a deal at the high-stakes summit.