The UK government has launched a legal challenge against plans for a European financial transactions tax (FTT).
The FTT, which aims to raise public funds and discourage speculative trading, will be adopted by 11 EU states - but not by the UK.
Ministers fear it could be imposed on UK firms trading with businesses based in one of those states.
The Robin Hood Tax campaign group said the legal move was about "defending one rather rich square mile".
The 11 countries going ahead with the FTT are Germany, France, Italy, Spain, Belgium, Austria, Portugal, Greece, Slovenia, Slovakia and Estonia.
Under their plans, transactions of shares, currencies and bonds would be taxed.
The City of London could be hit by the tax if, for example, a British firm trades with branches of French or German banks based in the capital.
The British government would have to collect the tax but would not be allowed to keep it.
BBC business editor Robert Peston said that, by increasing the costs of these deals, there could be big falls in the value of business carried out in the City, running to many billions of pounds.
'Tax on pensioners'
UK Chancellor George Osborne said an application had been lodged at the European Court of Justice on Thursday.
"We think that the financial transaction tax which the European Commission has put forward is not right for Britain," he told the BBC.
"Britain doesn't want to take part but it also doesn't want to be caught in the effects of this tax being introduced by other countries. Let's be clear - financial transaction tax is not a tax on banks or bankers, it's a tax on pensioners and people with savings and investments.
"So we want to make sure that yes ok, fine, if some European countries want to introduce those kind of taxes they can do so but they should not do so in a way that impacts Britain."
A European Commission spokesman said: "We remain confident that the decision to approve enhanced co-operation on the FTT, which was voted by EU member states on January 22 is legally sound.
"It is fully in line with international law and the principles of the single market. Transactions will only be taxed if there is an established economic link to the FTT-zone, in a way that is fully compatible with the principles of cross-border taxation."
Some European governments have blamed speculators and excessive trading for exaggerating the swings in financial markets during the 2008 crash and the recent eurozone crisis.
They believe the FTT will help to encourage more responsible trading by financial institutions.
The BBC's Robert Peston said the British government felt the 11 were interfering in an illegal way with the UK's sovereignty.
While it may have a point, there would be great displeasure at the UK's blocking tactics among the 11, especially in Paris, he added.
The perception would be reinforced of the UK moving further and further away from the EU's core, he said.
The Robin Hood Tax campaign group says that, if the UK signed up to a tax on the financial sector, "it could give a vital boost to the NHS, our schools, and the fight against child poverty in the UK".
Spokesman Owen Tudor said the legal challenge was "against the wishes of people in Britain and across Europe"
"Not content with letting our banks off scot-free, Osborne now wants to prevent European countries from making their financial sectors pay to repair the damage caused by the crisis.
"Resorting to lawyers is the last refuge of a chancellor who has lost the argument."
He said the move was "breathtakingly hypocritical - the UK's own £3bn stamp duty on shares is collected wherever UK shares are traded and regardless of who is trading them".