Jacques Chirac is calling for Britain's rebate from the European Union budget to be scrapped.

The French president, who hours earlier had secured key support from Tony Blair to help him win May's French referendum on the EU constitution, said the rebate, worth an average €4.6bn a year, could "no longer be justified".

Chirac had won concessions in the communique at the end of the two-day economic summit which said proposed laws to open up the continent's services market should preserve "Europe's social model".

The statement, which called for a rewriting of the proposed services directive, was a victory for Chirac, who is facing a tough battle in the forthcoming referendum.

However, the French leader, who was speaking at a press conference after Blair had left Brussels, said: "We cannot have reasonable budgetary balance without calling into question the British rebate."

Although Britain is outnumbered 24-to-one in its defence of the refund, Jack Straw, the foreign secretary, said he was prepared to block an agreement on the budget if the rebate was threatened.

"We have an absolute veto," he told the BBC. "The justice of the rebate is still there."

Denis MacShane, Britain's Europe minister, added that British citizens already paid two-and-a-half times more into the EU budget than their French counterparts and that would rise to 12 times the French contribution if the rebate was scrapped.