Talks in Brussels on Britain's demands for EU reform are not making "huge progress", European Commission president Jean-Claude Juncker has said.
In an apparent sign of frustration with the UK, the Commission president told the European Parliament that "it takes two to tango" and that "our British friends have to dance".
Mr Juncker's comments sparked confusion among Europe watchers after he appeared to suggest that "personally I don't think that Britain needs the European Union".
The apparent remark was hailed by Ukip leader Nigel Farage, who said he would buy Mr Juncker a bottle of champagne, while the Vote Leave campaign for an Out vote in the referendum due by the end of 2017 said it was "encouraged" by his stance.
But a spokeswoman for the president rushed out a clarification, insisting that the Luxembourger - who speaks English as a second language and appeared to "swallow" the critical word as he spoke - had been misheard and had in fact said "personally I do think Britain needs the European Union".
The confusion came on the eve of a summit in Brussels at which David Cameron will meet Mr Juncker for a working lunch to discuss progress in the technical talks between the UK, the Commission and the European Council secretariat, which began in June.
Mr Juncker told MEPs in the Belgian capital: "I want, we want, the Commission wants a fair deal with Britain and we are working in that direction.
"I can't give details about our negotiation. The teams are in close contact for weeks now. I can't say that huge progress has been achieved. I can't say that nothing has been achieved.
"It needs two to tango so we have to dance and our British friends have to dance. I am 150% in favour having Britain as a constructive member state of the European Union.
"We need Britain. Personally I do think that Britain needs the European Union but that's a matter of conviction others may have a different feeling on that."
Within moments, rival sides in the referendum debate were trading video clips of the difficult-to-decipher comment on Twitter in a furious dispute over exactly what the president had said.
Downing Street declined to comment on the remark, but Mr Farage said: "I want to buy Juncker some champagne. I have always had a personal liking for Jean-Claude Juncker even though we have political differences. His statement today that personally 'I don't think Britain needs the European Union' is spot on."
A spokesman for Vote Leave said: "In the last two days both the chairmen of Lloyds and JCB have said the UK could thrive outside the EU. It is encouraging to see that Jean-Claude Juncker also agrees."
But Mr Juncker's spokeswoman told the Press Association: "It was being misreported. He confirmed what he said, which was 'I personally do think Britain needs the European Union'."
Asked if Mr Juncker was right that talks on Mr Cameron's reform demands were not making "huge progress", the Prime Minister's official spokeswoman told a Westminster media briefing: "As we said from the outset, we are seeking to renegotiate the UK's relationship with the European Union. That is going to take time and it's going to take patience and what matters is that we get the right reforms to address the concerns of the British people.
"That's going to take sustained engagement and sustained work and that's what we've been doing and will continue to do."
Britain's renegotiation is expected to be mentioned only in passing in the official agenda for Thursday's summit, which will focus on immigration, though Downing Street said Mr Cameron expected to discuss it with other national leaders in the margins of the meeting.
Downing Street has indicated it expects wider talks with other EU member states over the next two months ahead of a "substantive discussion" at the European Council summit in December.
Amid reports that the crucial discussions on the final package may not take place until March, Mr Cameron's spokeswoman dismissed suggestions that the timetable for the renegotiation was "slipping", insisting that the Government had always made clear that the talks were "driven by substance, not by schedules".
"We haven't got into deadlines or precise timings," she said. "We want to get reforms to address the concerns of the British people."
Mr Cameron will also hold talks on Thursday with European Parliament president Martin Schulz, when he is thought likely to respond to Mr Schulz's invitation for him to address MEPs on his renegotiation.