David Cameron claimed on Friday evening he had safeguarded Britain's position in Europe as EU leaders extended a lifeline to Spain's tottering banks.
At the end of two days of fraught negotiations in Brussels, the Prime Minister said he had ensured that the UK would not be drawn into a planned "banking union" while securing explicit safeguards for the single market.
He also hailed a deal struck by the 17 eurozone members in the early hours of the morning which will enable cash from EU bailout funds to be channelled directly to struggling banks without adding to government debt.
"For the first time in some time we have actually seen steps taken that I think the markets will see are trying to get ahead of the game," he said.
"They need to be followed through, and I hope there won't be a lot of quibbling and worrying about 'is it too far' and the rest of it. If they want to save their currency they have got to get on and do it."
Cameron, who is under pressure from Conservative backbenchers to stage a referendum on the UK's relationship with Europe, also mounted an impassioned defence of the Britain's EU membership.
David Cameron: I'm a “practical eurosceptic”. Says there are “real benefits from being engaged” but “frustrated” by parts of relationship— politicshomeuk (@politicshomeuk) June 29, 2012
Describing himself a "practical Eurosceptic", he said the important concessions that he had won on banking union, on the single market, and on the new European patent court showed Britain could stand "proud and tall" in Europe.
"I am actually confident that Britain - fighting, standing up for itself in Europe - can secure good deals in Europe," he said.
"So a practical Eurosceptic, but one who is optimistic that we can get what we want in Europe.
"We need to safeguard what we do want in Europe and I am confident that we can do that.
"I think we should go into this argument confident that we can shape a relationship with Europe that benefits the United Kingdom.
"We should be standing proud and tall in Europe."
Cameron said he fought in the negotiations to remove language implying banking union could be extended to all 27 member states - ensuring British banks would continue to be regulated by the Bank of England.
"We have to stand behind our own banks but I don't want British taxpayers guaranteeing eurozone banks, Spanish banks or Greek banks," he said.
He won an agreement that the part of the new European patent court covering pharmaceuticals would be based in London, bringing "millions of pounds and hundreds of jobs".
Officials also revealed that Cameron and European Commission President Jose Manuel Barroso had worked together on summit declaration language designed to emphasise that the smooth-running of the 27-nation single market would not be compromised by new 17-nation rules for the running of the single currency.
"It was tough securing this, but absolutely vital, so that as this work proceeds it goes ahead in a way that protects our interests," the Prime Minister said.
Earlier, financial markets rose after the surprise news that the eurozone leaders had struck an overnight deal to shore up banks in Spain and other weaker nations.
The agreement came after Italian Prime Minister Mario Monti and Spain's Mariano Rajoy faced down Germany's Chancellor Angela Merkel in a tense summit showdown.
Hurrah! - Euro crisis over, Greek and Spanish economies in surplus, unemployment lowest in 15 years (Source: Barclays)— David Schneider (@davidschneider) June 29, 2012
Merkel had come to the summit determined to maintain her hardline position insisting that there were no short-term fixes on table.
However she was forced to relent after Monti and Rajoy - with the backing of French President Francois Hollande - made clear they would block any further progress at the summit if they did not get help to cut their soaring borrowing rates.
The agreement finally came after Cameron and the other non-eurozone leaders left the summit at around 1am, leaving the single currency bloc to thrash out their differences.
The resulting deal triggered a fall in the yields on 10-year bonds in Italy and Spain to 4.5% and 5.8% respectively - a welcome drop in the unsustainable 7% mark which has already pushed Greece, Portugal and Ireland into taking bailouts.
EU officials said they hoped the positive response of markets to the short-term and long-term plans agreed at the summit would last.
So did John Longworth, director-general of the British Chambers of Commerce, who said: "British businesses, and exporters in particular, say the eurozone crisis is one of the greatest source of uncertainty they currently face.
"The sense of frustration, concern and exasperation continues to mount across the real economy. Companies across Britain and Europe are tired of false dawns. Though there is still more work to be done over the coming weeks, the deal done in Brussels needs to stick. Confidence is the lifeblood of the European economy, and decisive action is needed to stabilise it, and quickly."