Conservative and Liberal Democrat ministers have faced one another across the Cabinet table for the first time since David Cameron's use of his European Union veto sparked a bitter row between the parties over Europe.
Deputy Prime Minister Nick Clegg told fellow ministers of the need for "constructive re-engagement with Europe" after the Prime Minister's actions at last week's European Council summit in Brussels, which the Lib Dem leader denounced over the weekend as "bad for Britain".
Mr Cameron characterised Tuesday's Cabinet discussion as "very good" and insisted that the coalition "will come out of this very strongly".
But he came under attack in the European Parliament, where there were calls for the withdrawal of the UK's £2.7 billion annual rebate after European Commission president Jose Manuel Barroso told MEPs Mr Cameron's demands at the summit would have undermined the single market and were "impossible" for the other 26 states to accept.
Mr Cameron said: "The coalition is very strong. The coalition came together for a good reason, which was to put aside party interest and to act in the national interest, particularly while there are so many challenges facing our economy.
"We had a very good Cabinet meeting where we talked about those challenges, we talked about the issues of recent days and I think the coalition will come out of this very strongly."
Leaving the meeting, Lib Dem Business Secretary Vince Cable said it was "a good business-like discussion, as you'd expect from a coalition".
"I certainly put the business point of view," he said. "We have got to have confidence in the UK. It mustn't be isolated. I think we all share that view and we have got to shore up that confidence and make sure companies will invest in Britain and create more jobs here."
At the European Parliament, Mr Barroso said: "The United Kingdom, in exchange for giving its agreement, asked for a specific protocol on financial services which, as presented, was a risk to the integrity of the internal market. This made compromise impossible."
Joseph Daul, leader of the centre-right European People's Party, called for the UK to lose its veto, saying: "The British cheque is now up for question. Tax monies should be spent on someone else rather than compensating selfish nationalism."
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