George Osborne is seeking to block any move by the European Union to put hundreds of millions of pounds of UK taxpayers' money on the line as part of the latest effort to rescue the Greek economy from collapse.
In a series of telephone conversations with counterparts ahead of a meeting in Brussels tomorrow , the Chancellor is said to have made clear that ignoring a 2010 agreement by using the EU budget as collateral against short-term loans for Athens is a "non-starter".
Prime Minister David Cameron declared in 2010 that he had won a "clear and unanimous agreement" that an EU-wide emergency fund would no longer be used to underwrite bailouts of struggling eurozone countries.
Instead responsibility was supposed to fall only on member states using the single currency under a new permanent mechanism specifically set up to deal with crises like that in Greece.
But the deal was not legally-binding and European Commission president Jean-Claude Juncker is reported to be seeking to turn back to the European Financial Stabilisation Mechanism (EFSM) to help provide Athens with desperately needed cash while a new bailout is agreed.
Using the EU budget - of which the UK pays around 14% - to secure 8.6 billion euros in loans to Athens could expose the Treasury to ?850 million of liabilities in the event of a default, the Daily Telegraph said.
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