Plan to keep Britain in European Union released

European Council President Donald Tusk, left, speaks with British Prime Minister David Cameron. Photo / AP

European Council President Donald Tusk has set out a plan for keeping Britain in the European Union to a mixed reception which underlined the challenges Prime Minister David Cameron faces convincing Britons they should stay in the bloc.

Cameron mounted a strong defence of membership of the 28-nation bloc after Tusk released details of his plan on Tuesday following weekend talks, though the British leader added that the EU was far from "perfect and unblemished."

If the terms worked out with Tusk are accepted and some improvements are made, Cameron said, they will offer the "best of both worlds" for Britain. Cameron has promised a referendum which could happen as early as June.

But with Eurosceptics branding the talks "trivial" and some of Cameron's allies questioning whether the package of measures will be enough, a summit of EU leaders that is due to discuss the proposals on February 18-19 looks likely to be difficult.

"Sometimes people say to me if you weren't in the European Union would you opt to join the European Union?" Cameron said at a manufacturing plant in Chippenham, southwest England.

"Today I would give a very clear answer: If I could get these terms for British membership I sure would opt in to be a member of the European Union because these are good terms and they are different to what other countries have."

Tusk's draft text addresses all four areas where Cameron has demanded reform and officials claimed victory in winning concessions to stem migration and to boost British sovereignty.

Cameron rejected criticism that he'd watered down his demands, saying improvements to the deal could be made. "This is not a done deal yet, there is a lot more work to be done over these next couple of weeks," he said.

Despite the prospect of further brinkmanship until the summit, financial markets and some business leaders took heart that a deal now appeared more likely, easing some uncertainty.

-AAP