David Cameron has said he would use Britain's "veto" a second time if he feels Europe's seven-year spending plan is too high.
As the Conservative Party conference opened in Birmingham, the Prime Minister said he was prepared to halt next month's budget talks if EU leaders refuse to cut spending.
Mr Cameron said he would not stand for "outrageous" attempts to increase the overall EU budget in negotiations on spending for the period 2014 to 2020.
"If it comes to saying, 'No' to a deal that isn't right for Britain, I'll say, 'No,'" he said in an interview with The Sunday Telegraph.
The Prime Minister also confirmed this time he has his Deputy PM Nick Clegg's blessing on the issue. The Liberal Democrats reacted with dismay when Mr Cameron used Britain's veto to oppose the EU fiscal pact last December.
Mr Cameron has also proposed a "bold thinking" plan for the EU to have two separate budgets - one for the 17 eurozone nations and the other for the 10 - including Britain - outside the single currency.
Such a plan is likely to prove highly popular with Conservative MPs who have been pressing for a referendum on Britain's future in the EU.
Mr Cameron faces a potentially tricky week with the party trailing Labour in the polls and the economy mired in recession.
The Prime Minister has also made clear he was not ready to concede the political centre ground to Ed Miliband after the Labour leader's party conference speech claiming his was the true "One Nation" party.
He also dismissed Liberal Democrat demands for a "mansion tax" and benefit cuts for wealthy pensioners as part of efforts to tackle the deficit.
But the Prime Minister signalled that the coalition would be targeting the rich with new measures to help balance the books.
Interviewed on the Andrew Marr Show as the Conservatives kicked off a potentially tricky conference in Birmingham, Mr Cameron dodged questions about
whether the economy was finally recovering from its double dip recession. He also insisted it was "too early to say" whether the Government would miss its key target for public sector debt to be falling by 2015.
"I'm not an economic forecaster so I cannot tell you exactly what is happening in terms of the day-to-day growth, but I can tell you that our economy is rebalancing," he said.
"Are the Conservatives deserting the common ground of British politics? Absolutely not," he said.
He attacked Mr Miliband for "signalling right but turning left" and poured cold water on his much-trumpeted feat of speaking for more than an hour without a text.
"It is difficult to give a speech without notes for 70 minutes. It's even more difficult when you haven't got anything to say," he said.
Mr Cameron launched his own Twitter account on the eve of his party's conference and within hours attracted more than 65,000 followers - and a barrage of abuse from hostile users of the social network.
In his first tweet via @David_Cameron, the Prime Minister wrote: "I'm starting Conference with this new Twitter feed about my role as Conservative Leader. I promise there won't be 'too many tweets'.'"
He followed up by posting a photograph of himself meeting staff at the John Radcliffe hospital in Oxford.
The Prime Minister also sought to play down the potential threat to his leadership from London mayor Boris Johnson, whose popularity soared over the summer with the success of the Olympics.
According to an opinion poll for The Observer, voters much prefer Mr Johnson (+30%) to Mr Cameron (-21%).
Despite a series of attacks by the London mayor - most notably over the expansion of airport capacity in the South East - Mr Cameron insisted he was "relaxed about the blond-haired mop sounding off from time to time".
He added: "He will always speak his mind. There is no point in trying to contain Boris."