European Union members can still agree on a budget, but Britain must first yield more ground on its rebate and on overall spending, the Taoiseach said today.
"Some movement has to be made on the rebate," Mr Ahern told reporters in Dublin today, adding that a modest increase in spending proposed by Britain did not appear to go far enough.
"Just from a quick glance, and it was only a quick glance, I don't think there's many significant changes in it," he said.
"I hope the (UK) presidency will make an improved offer if a deal is to be reached."
Britain has sparked fury and veto threats with its latest budget proposals that raise spending only slightly, setting the scene for a tough battle at a decisive two-day summit opening tomorrow in Brussels.
The last attempt to agree a 2007-13 budget ended in acrimony in June.
Mr Ahern said he agreed with European Commission President Jose Manuel Barroso's view that spending 1.03 per cent of EU output in its 2007-2013 budget was simply not enough.
"This figure would make it very difficult to address the Union's needs in their totality and it would clearly create problems for a range of countries, notably the new member states ... There is a need to bring the ceiling back towards 1.06."
The Taoiseach said that after the "debacle" of failed referendums in France and the Netherlands on an EU constitution, there was "real pressure on everybody" to strike a deal.
"The European Council needs to show that it can make important decisions in the overall interests of all of the citizens of Europe and I know that an early deal is of particular importance to the new member states."
As for Ireland's own demands, Mr Ahern said that as his country shifts from net recipient to a net contributor of EU funds, his stance was less about money and more about principles, particularly on farm spending, which Blair wants reviewed.
Ireland, with France, says that under the Common Agricultural Policy (CAP), the EU has agreed fixed spending levels until the end of 2013 and that that should not change. "I'm not hugely tied up on when the review starts, but I am absolutely opposed to anything that starts before Januarys 1st 2014" he said.
Mr Ahern said Ireland also wanted to see a reversal of proposals to cut rural development funding: "I made this point very strongly to Tony (Blair) at our two meetings. Needless to say, it would help Ireland if that happened."