Media playback is unsupported on your device Media caption Welsh government needs to 'do the right thing' on income tax powers David Cameron tells BBC Wales' Nick Servini

David Cameron has ruled out making major changes to the way the Welsh government is funded from Westminster, in the wake of the Scottish referendum.

He renewed his call for Wales' first minister to take advantage of new powers and hold a referendum on devolving some control over income tax.

Carwyn Jones has said Wales needs a better financial settlement first.

Mr Cameron accused Mr Jones of making a political argument, rather than doing "the right thing" for the Welsh people.

The prime minister told BBC Wales: "There aren't plans for some huge change in the formula distribution.

"It's up to different parties to make clear what happens next. For my part, as a Conservative, I want the Welsh assembly to have these powers in order to do more for the Welsh people.

'Separate issues'

"I do not really understand the first minister's thinking here, because surely it makes more sense for the Welsh assembly, whatever the level of grant it gets, to have the power to be able to raise and spend more of its own money?

"It sounds like he is making quite a political argument rather than just thinking: 'These are separate issues, let us do the right thing for the Welsh people and have devolution' - which is my view."

Mr Jones has refused to call a referendum on tax raising powers unless the UK government addresses what he claims is a funding shortfall under the Barnett Formula, that distributes money from the Treasury to the devolved governments of Wales, Scotland and Northern Ireland.

'Worse off'

A spokesman for the first minister said: "This is the exact sort of U-turn we warned against following the referendum in Scotland.

"The prime minister previously said he would address the fair funding issue, and now he appears to be going back on that.

"What he is proposing would leave Wales worse off, and we cannot accept that.

"We know that we are being underfunded by £300m a year and this must be addressed without further delay."

On Tuesday, the UK government published changes to proposed legislation which would give the Welsh government greater flexibility if it agreed to take partial control of income tax.

'Discussions continue'

But a reluctance from the Prime Minister to move on the Barnett Formula would appear to make adopting tax raising powers in Wales a remote possibility.

However, Wales Office minister Alun Cairns said the UK government's devolution cabinet committee was still examining constitutional issues following the Scottish vote in September.

"Funding for Wales will form part of this discussion, however no decisions have yet been taken," he said.