The Minister for Foreign Affairs has implicitly criticised the British rebate as "a vestige of the past", saying it was preventing new EU member states from getting the funds they require to develop their economies.
Just after the EU summit opened last night, Dermot Ahern said the "general mood" among member states was that the EU needed an agreement, but that success would be difficult.
The Taoiseach last night offered assistance to the British prime minister in his efforts to reach a deal on the future budget, said the Minister for Foreign Affairs.
If there was no movement from the British position that they would contribute an extra €8 billion between 2007 and 2013 to the EU budget, and the French demand that they increase this figure to€14 billion, then there would be no deal.
He said Ireland was concerned about the broad shape of the deal, to ensure that the new member states got the same generous funding Ireland had got when it joined the EU, "but on the other hand obviously we have to keep a close eye on our own national interests. We have to look after our own people".
These interests included preserving the agreement on farm funding through the Common Agricultural Policy, as well as the preservation of as much rural development funding as possible.
Mr Ahern said last night that the Government remained adamant that whenever Cap funding was reviewed, the Government did not want to see a less generous payments regime come into force until 2013, as agreed.
The Government also accepts that rural development funding will be cut, but the Irish aim is to ensure the scale of the cut is reduced. The latest British budget proposals earlier this week would give Ireland €250 million more in rural development funding than was contained in the failed budget proposals of the Luxembourg presidency in June.
Mr Ahern also said the Taoiseach had spoken for 10 minutes last night to British prime minister Tony Blair, who holds the rotating presidency of the European Council. The Taoiseach, as a veteran of EU budget negotiations, had offered to assist Mr Blair in whatever way he could to find agreement.
"We are here to get an agreement and I think the Taoiseach, given his close personal relationship with Tony Blair, also wants to assist in whatever way he can with the UK presidency."
He said Britain was in a difficult position because of the strong position it had taken on its rebate, while on the other side of the debate France was in an equally strong position.