Prime Minister David Cameron has won the backing of 10 other European countries for his call to limit the increase in the EU's budget next year.
In a joint statement the 10, including France and Germany, said the planned 6% rise was "unacceptable" when national governments were cutting spending.
No 10 said the statement sent a "very strong signal" to EU institutions about the need for budgetary restraint.
But European Parliament President Jerzy Buzek said opinions were split.
EU leaders meeting in Brussels are grappling with how to protect Europe from a repeat of the recent Greek debt crisis but arguments over the size of the EU's budget - which are not on the formal agenda - have moved to the centre stage.
There is widespread anger in the Conservative Party about the proposed 5.9% increase to the EU's £107bn budget agreed by the European Commission and approved by the European Parliament - which could cost the UK an extra £900m a year.
Before arriving at the two-day summit, Mr Cameron had hoped to build support for a freeze in the budget, the least that many Tory MPs want to see happen.
But accepting this was impossible, Mr Cameron has thrown his weight behind a call to limit the rise to no more than 2.9%, which would cost the UK an extra £450m.
He told reporters and other delegates at the event that anything higher would be "completely wrong" at a time of austerity across the continent.
No 10 said it now had the backing of France and Germany - the EU's two most powerful members - as well as the Netherlands, Sweden, the Czech Republic, Denmark, Austria, Finland, Slovenia and Estonia for that stance.
All 11 signed a statement saying the 5.9% rise was "especially unacceptable at a time when we are having to take difficult decisions at national level to control public expenditure", adding that they would not accept a rise of more than 2.9%.
Although there are weeks of negotiation ahead over the issue, the 10-nation bloc may be in a position to stymie the European Commission's plans.
If the different parties cannot reach agreement on an exact figure by the end of 2010, the current budget would continue operating into 2011 - effectively amounting to a freeze. It is thought that ministers would agree to a rise of about 2.9% although the final amount could be somewhere in between the two figures on the table.
A No 10 spokesman said the statement sent "a very strong signal to the European Parliament and the European Commission that they need to show the same fiscal and budgetary discipline that we have".
But European Parliament President Mr Buzek suggested the argument was far from won by either side.
"10 people does not mean that this is the majority of the [EU] Council," he said. "So I would say opinions are split. But everybody has stressed and let me repeat it once again, everybody has stressed, that we are going through difficult times so we need to cut spending."
The BBC's Political Correspondent Ben Wright said that while Conservative MPs seeking a freeze or even a cut in the UK's contributions to the EU budget were likely to be disappointed by the outcome, the prime minister had little room for maneouvre in negotiations.
Wayne David, the shadow Europe minister, accused Mr Cameron of using "blood curdling" language about Europe at home while his officials appeared to be indicating the government had already "thrown the towel in" and would accept a budget rise.
He told the BBC a "sizeable" rise in the EU budget would be "against the national interest".
And UK Independence Party chairman Paul Nuttall said Mr Cameron had failed in the objective he had set himself to negotiate the best possible deal.
The 27 EU leaders are also considering whether to impose sanctions on countries that run up huge deficits to avoid a repeat of the Greek troubles.
France and Germany believe that a new permanent mechanism for handling financial crises requires a change to the Lisbon Treaty.
The UK is outside the Eurozone, so would not be affected by any treaty change but Mr Cameron is aware that, if this happens, MPs in his own party might see it as an opportunity to push for other changes in a bid to bring some powers from Brussels to Westminster.
The UK's Europe minister, David Lidington, told BBC Radio 4's Today programme there was no consensus on treaty changes, even within the Eurozone.
The government has pledged to hold a referendum on any future European treaty which saw the UK conceding any of its legislative powers to Brussels.
The proposed changes to the Lisbon Treaty would bring in sanctions for countries overshooting the maximum debt level allowed under the EU's Stability and Growth pact (SGP) - 60% of gross domestic product.
The sanctions would be tightened progressively, if a country failed to address its debt problems within months.
Here is a selection of your comments
We should be cutting the amount of money going to Europe, not giving Brussels more money to waste. James Stewart, Edinburgh
The EU started as a trade zone to reduce costs to consumers. It is now a juggernaut out of control. MEPs disappear to the two parliaments for years and are not seen. It takes more power, employs more people, costs more and nobody seems to be in control that voters can influence. John Loader, Leyburn
The plea is fine - but if it doesn't work he MUST NOT let the proposed budget increase be ratified. The EU already costs Britain far too much and what started as a trading treaty has turned into The United States of Europe - which was never voted for nor was it wanted by the majority of UK people - even if the politicians fail to acknowledge this for some reason. Paul Telling, Farnham
David Cameron should refuse pay any increase in the EU budget given the current circumstances. We should not have to plea for anything from the EU. The sooner the UK people are allowed a referendum the better. MEPs have proved they are just greedy. Do we get value for money from the £15 billion the EU costs us? Brian Smith, Fareham
I am a very strong supporter of the EU and of the UK being a constructive committed member, but it is wrong timing to go for an increased budget at this time. At least it should be spelled out where the extra money is needed. Keith Tunstall, Bletchingley, Surrey
It is now time to leave the EU. We cannot afford to stay in, the huge cost to Britain is an unacceptable burden that we cannot sustain. We would be better off governing ourselves, doing unrestricted trade with the rest of the world, be able to regulate our border controls and be better off without the EU mandates that we follow to the letter, but other members only follow if it suits them. Gerald Payne, Manchester
There is a very simple word that was used to great effect against the UK for many years: "Non" Mike Lowery, Moreton Morrell, Warwick
I am a tax-paying French resident. Britain is far too honourable in a club of self-interested members, the EU. If France sees its interest in breaking rules it will do so. The UK should simply say that, with regret, it cannot afford to pay any more and shame the others into any action they deem necessary. Richard Wheatley, Sarlat, France
It appears that on Europe, Cameron talks a lot of talk, but delivers very little in terms of the walk, ultimately saying that his hands are tied. He should go in the way of Thatcher and get concessions from the EU. Mary Johnson, London
EU spending is out of control and is unable properly to account for all our money. It is pointless to allow the Commission to continue using so much of our money when it refuses to accept any responsibility for where around 80% of this money goes. Alasdair Campbell, Bath
We should not only be looking at how much money the EU wants we should be looking at what they are planning on spending the money on and how the UK will benefit from that investment. Darren Knox, Swansea
Its terrible timing for a budget increase, but there are 27 countries in the Union and we have be realistic about compromise. It is a 'union' after all. Ross, Glasgow
David Cameron should be accepting nothing less than a large reduction on a scale that accords with our own budget reductions. There is no point in making savings at home if we simply give it away to the EU. John, Llandudno
What would Churchill have done? Britain comes first. Just say no! But I don't think Cameron has the backbone. He's good at bullying the weak, but won't stand up to the strong! But then nor would Miliband! Ron Price, Plymouth
We should definitely not pay any increase at all, we should put the money to use in our own country - I pay my taxes to the benefit of England not Europe. Jan Fitzpatrick, Sheffield