Jean-Claude Juncker will meet Tony Blair last of all

The figure falls between the 1.24% suggested by the European Commission, and the 1% insisted on by the six biggest net contributors to EU coffers.

A European summit in Luxembourg next week will attempt to resolve the row.

The UK is under pressure to give up its rebate, won in 1984, but has threatened to use its veto to preserve it.

The Luxembourg presidency of the European Union is working on its own compromise proposal and is holding a series of bilateral "confessional" talks with European leaders.

UK Prime Minister Tony Blair is scheduled to be the last to meet his Luxembourg counterpart, Jean-Claude Juncker, who has proposed freezing the British rebate at its current level, and gradually phasing it out.

The European Parliament threatened to reject any agreement that contained too little funding for research and development and regional aid.

Farm cash cuts?

This appeared to be a reference to a compromise package floated by Luxembourg last month, which would have chopped about 50bn euros (�34bn) from the "Lisbon Agenda" programme to make Europe a more competitive economy.

French farmers and ministers are opposed to cuts in farm spending

It would also have cut 40bn euros from the regional aid budget.

Many governments have said that reaching a budget deal next week would send a signal that the EU was back on track after French and Dutch voters voted "No" to the European constitution.

Luxembourg negotiators believe the UK could compromise on its rebate - which in 2004 reduced the country's net contribution to the EU from about �7bn to about �4bn - if French President Jacques Chirac can be persuaded to give ground on agricultural aid.

They are reported to be considering proposing further cuts to planned spending on rural job creation.

The parliament's proposal would stem the flow of cash to existing member states via the Common Agricultural Policy from 2007 onwards, when Bulgaria and Romania are due to join the EU.

It says that Bulgarian and Romanian farms should be paid out of the same pot of money, currently about 43bn euros per year, which would leave less money for other countries.