Blair's concession to European critics is rebuffed as Ahern joins attack on rebate

Tony Blair described Britain's ¤4.6bn-a-year (£3bn) rebate on its contributions to the European Union as "an anomaly that has to go" as he tried to heal the wounds left by last week's acrimonious Brussels summit.

Tony Blair described Britain's ¤4.6bn-a-year (£3bn) rebate on its contributions to the European Union as "an anomaly that has to go" as he tried to heal the wounds left by last week's acrimonious Brussels summit.

Downing Street is worried that Britain has alienated natural allies, including the 10 new members who joined the EU last year, by blocking a deal at the summit. Mr Blair's official spokesman made clear that he would trade the rebate for cuts in the Common Agricultural Policy (CAP), saying that the British public would accept that as "a price worth paying".

But Mr Blair will not escape further criticism from Britain's EU partners.

The Irish premier Bertie Ahern said plans by Mr Blair to link reform of the EU's CAP with its EU rebate was a dishonest and unfair argument. Mr Ahern said he totally disagreed with Mr Blair's position on the EU budget which caused a stalemate at last week's European Council summit.

Jean-Claude Juncker, the Prime Minister of Luxembourg, which holds the EU's presidency, will defend his handling of the summit today and challenge Mr Blair's credentials as a reformer of European farm subsidies. He will address the European Parliament a day before Mr Blair outlines to MEPs Britain's goals for its six-month presidency starting on 1 July.

Mr Juncker said that the budget dispute represented "a fundamental divergence about the way Europe will develop". He will say today that, in 2002, Mr Blair signed up to the agreement on agriculture spending he has since targeted so publicly. He is expected to remind Britain it endorsed this policy 18 months ago in a letter with five other countries calling for a break on EU spending.

At a news conference in Downing Street with Goran Persson, the Swedish Prime Minister, Mr Blair said: "We have made it clear all the way through that we are prepared, not just to discuss and negotiate upon, but to recognise that the rebate is an anomaly that has to go, but it has got to go in the context of the other anomaly being changed as well." He tried to deflate the excitement among Britain's Eurosceptic newspapers, some of which have embraced him as one of their own after he refused at the summit to give up the rebate won by Margaret Thatcher 21 years ago.

"I am a pro-European, I believe in the European Union," he said.

The Tory opposition accused Mr Blair of a U-turn because, 10 days earlier, he had told MPs he would not "negotiate away" the rebate.

George Osborne, the shadow Chancellor, said: "One minute Mr Blair says he will fight to the end for Britain's interests. The next he says Britain's rebate is an anomaly that has to go. He is more slippery than an eel in a tub of grease. There is no anomaly in trying to save billions of pounds of taxpayers' money. Britain should be paying less."

In Brussels, diplomats insisted the offer made to Mr Blair would have made the annual "British cheque" worth about ¤5.5bn a year from 2007-13, ¤900,000 more than the average value over the last funding period. And, instead of changing the structure of the mechanism won in 1984, it would have excluded elements of spending in the new EU countries from its scope.

Dominique de Villepin, the French Prime Minister, accused Mr Blair of making false comparisons between farm subsidies and its rebate. "These two expenses have nothing, strictly nothing, to do with each other."

The German Chancellor, Gerhard Schröder, appealed for a new round of political union in Europe.

Mr Persson, who joined Britain in opposing the EU budget proposed at the summit, said the dispute was "a more complicated issue" than the rebate. "Even if the British rebate had been solved, I might have been in the position that we have said we want nevertheless to have a new structure on the budget."