David Cameron promised to do "everything I can" to secure reform in Britain's relationship with the EU, but admitted that after a long night of talks "there is still no deal".
The Prime Minister was locked in discussions with fellow EU leaders in Brussels until 5.30am on Friday morning, but a Cabinet colleague later said that agreement remained "out of reach".
As leaders reconvened for the second day of the European Council summit, Mr Cameron pledged that he would not accept a watered-down agreement which did not meet his demands for change.
"I was here until 5 o'clock this morning working through this," he said. "We've made some progress but there is still no deal.
"As I have said, I will only do a deal if we get what Britain needs, so we are going to get back in there, we are going to do some more work and I'll do everything I can."