Tory rebels have said they believe the government is "within single figures" of defeat on a late Wednesday evening vote on the EU budget.
David Cameron wants a freeze in the budget, but the Labour Party has joined forces with eurosceptic Conservative backbenchers in demanding a real-terms cut.
The prime minister was dealt a blow when the Speaker refused to select an amendment touted as a compromise to split opposition.
Instead, the Commons will vote on a text put forward by Tory backbencher Mark Reckless (Rochester and Strood) demanding a real-terms cut.
Labour MPs will be ordered to support the amendment this evening, and smaller parties are also expected to fall into line - raising the prospect of a humiliating defeat for Cameron.
The PM and chancellor George Osborne are said to have been holding personal meetings with wavering Conservatives amid a frantic operation by Government whips.
Although the result is not binding on the Government, it would be awkward for Cameron to defy the will of the House at next month's EU summit.
During Wednesday's prime minister's questions, Ed Miliband taunted Cameron, telling MPs he was as “weak” as John Mayor had been over Europe.
The PM and Chancellor George Osborne are said to have been holding personal meetings with wavering Conservatives amid a frantic operation by Government whips.
But a rebel source told the Press Association that the result is likely to be close, with the margin of victory down to “single figures”.
Tory rebels expect 40 to 60 of their 304 colleagues to back the amendment, including Mark Pritchard, Zac Goldsmith, Bill Cash, John Redwood, Bernard Jenkin and Peter Bone. Many more could abstain.