Analysis By Nick Assinder Political Correspondent, BBC News website

Tony Blair is being as careful as ever with his words over Britain's much-challenged �3bn EU budget rebate.

Blair will veto rebate change

On Wednesday he told MPs: "The UK rebate will remain and we will not negotiate it away. Period."

As ever, though, this might not have been as straightforward a statement as it might at first have appeared.

The word "away" is the key as it fails to rule out changes in the size of, or formula for setting the rebate.

The prime minister's statement, and the Downing Street form of words that the rebate is "wholly justified" and will be retained with the use of the veto if necessary, leave room for manoeuvre.

He was more blunt on Friday, at a joint press conference with European Parliament president Josep Borrell, saying the rebate would only be up for negotiation if the EU fundamentally reformed its finances.

"If you have a fundamental review of how Europe spends its money then of course everything then is open to debate," he told reporters.

In other words, if the EU does eventually get to grips with the Common Agricultural Policy, as the government wants, that could change the whole basis on which the UK needs a rebate.

New budget

But none of this is about to happen now, or probably any time soon, whatever other EU leaders may propose.

That UK veto ensures that and, to the realists, makes prolonged debate over the issue at the summit pointless.

French rejection of constitution a big issue

It has arisen because the Luxembourg government, current holders of the EU presidency, wants to settle a new budget for the union for 2007-13.

The European Commission plan for an increase from 1% of EU income to 1.14% has already been rejected by the big states. So Luxembourg has come up with a compromise of 1.06% - but with a renegotiation of the UK rebate.

Downing Street's line on this is simple. If the Luxembourg presidency want the issue discussed then it can go onto the agenda, but any move on the rebate will be vetoed. Period - as the PM might say.

That does not mean the issue is dead for ever more but, until far bigger issues about the EU's economy and CAP are addressed, it isn't a runner.

Bigger debate

Meanwhile, of course, some countries - notably France - might see a big row over the UK rebate as a happy diversion from the real crisis over the EU's future sparked by the French rejection of the constitution.

The UK's rebate continues to be a controversial EU issue

The timing is all difficult for the prime minister who will take over the presidency on 1 July and will, therefore, have to take a wider view than mere domestic self-interest.

And the enlarged EU, with the inclusion of Eastern European states, means the rebate will increasingly become an issue.

But Mr Blair has set his sights on the bigger debate on the consequences of the French "No" vote and his campaign to get the 25 states to get with the modernising agenda of recognising globalisation is not a tide that can be turned but that has to be ridden.

And it is that debate which is far more likely to dominate both next week's summit and the UK's six month presidency.