Constitution is agreed despite bitter row

European Union leaders reached a landmark agreement on an EU constitution last night as they finally buried their differences to prevent the Brussels summit collapsing.

European Union leaders reached a landmark agreement on an EU constitution last night as they finally buried their differences to prevent the Brussels summit collapsing.

Despite an acrimonious row between Tony Blair and Jacques Chirac, the French President, over the concessions offered to Britain, the 25 leaders reached a compromise after two days of tense negotiations. The deal will give Europe its historic first-ever constitution but also gives several EU leaders, including Mr Blair, the headache of winning a referendum in order to ratify it.

Mr Blair welcomed the agreement as "truly historic" and "successful for Britain and Europe". He hailed the summit as a decisive turning point towards a "New Europe" that was no longer dominated by the Franco-German alliance. He said the recently expanded 25-strong bloc could not have "one dominant view". Insisting that Britain was not isolated, he said: "Instead we have found common cause and common allies in ensuring that Europe remains a Europe of nation states." The Prime Minister, who said Britain had achieved all its objectives in the negotiations, declined to say when he would call the referendum, which is expected in early 2006.

But President Chirac hit back, warning that the new treaty gave groups of member states who wanted to "go faster" the power to do so. Mr Blair did make a concession that will allow more "enhanced co-operation", which could result in a "two-speed Europe" with Britain in the slow lane. France, Germany and the Benelux countries may forge closer links on tax harmonisation, justice and home affairs. A common tax policy among an "inner core" could erect a new barrier to Britain joining the euro.

Bertie Ahern, the Irish Prime Minister who chaired the fractious summit and brokered the deal on the constitution, acknowledged the failure to agree a new European Commission president, but said: "I'm most glad we got a constitution. I'm off to celebrate."

Mr Blair came under fire back in Britain. Michael Ancram, the shadow Foreign Secretary, said: "This constitution would be bad for Britain and bad for Europe.The majority of British people ­ and business ­ oppose it. Tony Blair hasn't listened to them. He's deaf to their concerns."

Mr Blair was warned that up to 40 Labour MPs would vote against the new Treaty. John Cryer, a member of the left-wing Campaign Group, said: "Between 30 and 40 of us will oppose the new constitution because it contains all sorts of nasties." Labour opponents claim the constitution could open Gordon Brown, the Chancellor, to a legal challenge if he breaches the EU's borrowing rules or force the Government to open public services to competition.

The new blueprint, designed to streamline the EU's operations, will create a new Foreign Minister for Europe and a President to drive through the decisions taken by the 25 leaders, slim down the European Commission and reform the voting system in the decision-making Council of Ministers.

The Anglo-French rift cast a shadow over the summit. Mr Blair's spokesman said it was "unfortunate" that the French President had criticised Britain's concessions before the talks began on Thursday and accused Germany of linking the negotiations on the constitution with the haggling over choosing a new European Commission president to succeed Romano Prodi this autumn.

Germany denied the charge, while M. Chirac stuck to his guns, calling on the other 24 leaders to be "ambitious" and ruling out any further watering down of the constitution by Ireland, which chaired the summit as the EU's rotating presidency. But he dropped his original demand for the withdrawal of concessions to Britain.

Mr Blair sat tight, with his officials saying the onus was on other countries to reverse the changes proposed by the Irish. These include maintaining the national veto over tax and social security and making clear that a new EU Charter of Fundamental Rights will not affect national laws such as Britain's legislation on strikes.

EU leaders rejected the idea of writing an explicit reference to God or Europe's Christian heritage into the constitution. A group of mainly Catholic countries had campaigned for this.

After last week's European Parliament elections saw a rise in support for Eurosceptic parties, EU leaders acknowledged the need to avoid a repeat of their damaging failure last December. The main stumbling block then ­ voting power in the Council of Ministers ­ was resolved last night by a compromise plan to reassure Poland and Spain. The final version of the constitution will make it easier for the two nations to block EU laws they dislike. Legislation will require the support of 55 per cent of countries representing 65 per cent of the EU's population, instead of 50 per cent and 60 per cent respectively. At least four countries would be needed to block any proposal.

EU leaders agreed that the number of European commissioners would be reduced to two-thirds of the number of member states by 2014, which means that countries will no longer have automatic representation on the Commission.