Suggestions that David Cameron has left Britain isolated in Europe by deploying his veto have been downplayed by German Chancellor Angela Merkel, who insisted the UK will continue to play an important role in the European Union (EU).

Mr Cameron told the House of Commons he would "make no apology for standing up for Britain" by blocking treaty changes to shore up the eurozone, forcing the other EU members to strike their own "fiscal compact" outside the official treaty framework.

But he was accused of making a "catastrophic mistake" by Labour leader Ed Miliband, who urged him to re-enter negotiations with the other 26 EU states to try to get a better deal for Britain.

The clash came in the final session of Prime Minister's Questions before Christmas, at which Mr Cameron was flanked on the Government frontbench by his Liberal Democrat deputy Nick Clegg, who has described the failure to get a deal at last week's European Council summit as "bad for Britain".

After staying away from the chamber on Monday for Mr Cameron's statement on the Brussels summit and joining his MPs in a mass abstention on a motion congratulating the PM, Mr Clegg was greeted with mocking cheers from Labour MPs as he took his seat.

Mr Miliband said that Mr Cameron had promised the coalition Government would operate in a "collegiate" way and asked: "What's gone wrong?"

But Mr Cameron - buoyed by a notable boost in the polls since the dramatic events of Friday morning - retorted: "No-one in this House is going to be surprised that Conservatives and Liberal Democrats don't always agree about Europe. I make no apology for standing up for Britain."

In Berlin, Mrs Merkel sought to mend fences with London by saying it was "beyond doubt for me that Great Britain will in future continue to be an important partner in the European Union".

Mr Clegg, too, was trying to rebuild bridges, meeting a group of pro-European business leaders to assure them that the Government is "absolutely determined" to ensure that Britain remains at the heart of the European single market.

He acknowledged "differences of view" between the two coalition parties but told members of Business for New Europe - including Tory peer and former European Commissioner Lord Brittan - that he spoke "on behalf of the whole coalition Government" in maintaining the importance of Britain's place in the EU.