German Chancellor Angela Merkel and French President Nicolas Sarkozy have called for a new treaty for Europe, with or without Britain.
At the start of a crucial week for the eurozone, the two leaders abandoned plans to change the existing Lisbon Treaty and discussed plans for greater fiscal unity among eurozone countries, and any others who want to join, through a brand new agreement.
Mrs Merkel has long said she wants the European Union to oversee the budgets of all 17 euro-currency nations.
Mr Sarkozy, who is just five months from a presidential election and had previously expressed opposition to handing over budgetary control to an unelected European body, seems to have come round to the idea.
"France and Germany will not be paying for other people's debts without being able to control what others are doing," Mr Sarkozy said.
Under the new proposals, there would be automatic sanctions if nations do not comply with the current deficit limit of 3% of gross domestic product.
"What happened in Greece can never happen again," the French president added.
Eurozone leaders would also be required to meet monthly and the bailout fund would be strengthened.
Both leaders stressed that the European Court of Justice (ECJ) would not be able to veto a budget - any breaches would be addressed by the nation's own courts with the ECJ providing a check.
They have written to Herman van Rompuy, the European Council President, outlining their ideas, before their proposals are presented at the EU leaders' summit in Brussels on Friday .
However, David Cameron said: "As Prime Minister I'm not intending to pass any powers from Britain to Brussels."
He added that no changes would take place without the vote of the electorate and that the underlying problem in the eurozone is a problem of competitiveness between countries sharing a currency.
Meanwhile, Italy's government approved tough new austerity measures over the weekend, which its new prime minister, Mario Monti , hopes will save the government 20bn euros.
The measures include immediate cuts to the costs of maintaining Italy's bulky political class as well as significant measures to fight tax evasion, Mr Monti said after a three-hour cabinet meeting.
As part of the political cost cuts, Italy's PM said he would forego his salaries as premier and finance minister.
He said the move was a personal decision and not meant as an example for other ministers in the new government formed less than three weeks ago after Silvio Berlusconi 's resignation.
While the package includes measures to spur growth and competition, it raises the retirement age and the number of years of service to qualify for a full pension - steps strongly opposed by unions.
It will also see new taxes imposed on Italians' private wealth, including their homes, boats and luxury cars.
In Ireland, Prime Minister Enda Kenny addressed the nation to warn it is spending 16bn euros more than it is taking in from taxes.
But he added: "Let me say this to you, you are not responsible for this crisis.
"My government is determined that now the necessary decision and challenges are made to ensure that this is never allowed to happen again."
The Irish coalition government went on to announce 2.2bn euros of spending cuts as part of its budget.