It would be a great relief if Britain left the EEC Greek leader Andreas Papandreou

Mrs Thatcher described the situation as "frustrating" after the members had come so close to a settlement but run out of time.

As it ended in failure, French and Italian authorities announced they would consider blocking Britain's �450m rebate from last year.

Mrs Thatcher said she would then consider withholding Britain's payments to Europe until the rebate was settled.

The matter will be discussed by the Cabinet tomorrow but in the House of Commons this afternoon Mrs Thatcher made clear she did not intend to back down describing the actions of the European Community as "reprehensible".

"It is almost intolerable that one should be expected to send a supplementary levy in the face of what has happened," she said.

But her European counterparts placed the blame on Mrs Thatcher and stated her actions had left the community in disarray.

Greek leader Andreas Papandreou said, "It would be a great relief if Britain left the EEC".

And Italian premiere Bettino Craxi said: "The British government bears the entire responsibility for this failure."

The row brings into question the future of the EEC and what action the other nine member states should take.

EEC President Gaston Thorn said it was imperative an agreement was reached.

"We have so many challenges to face and the community is getting more and more shaky. We cannot go from one failure to another."

The discussion on rebates has been raging for some time since Edward Heath's government did not decide on a payment plan when it negotiated Britain's entry to the community 12 years ago.

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