He is quoted in the Welt am Sonntag newspaper as saying Europe cannot expect Germany to pay the highest net contribution but at the same time do nothing against "unfair tax competition".

His comments are the first public suggestion that Germany may link its financial support to the EU with the stalled efforts to coordinate taxes.

Asked if Germany was actually going to refuse large payments to the EU, Mr Lafontaine said Bonn was only looking for a fair deal.

Oskar Lafontaine: Enemy of British tabloids

"We are not demanding any conditions. We are hoping for fair cooperation," he said.

Mr Lafontaine said proposals put forward by the EU Commission offered a chance of progress during the German presidency, which begins on 1 January.

German demands for EU nations to have common taxation have met strong opposition from London.

The Sun newspaper dubbed Mr Lafontaine "the most dangerous man in Europe" following his demands for tax harmonisation earlier in December.

With some of the highest tax rates in Europe, Germany wants to make revenue harmony a focus for the group over the next six months.

Chancellor Gerhard Schroeder has complained that countries with lower tax rates hold a competitive advantage in the single market.

His new German government says that Bonn pays an unsustainable 60% of the EU budget - a total of $13bn.

Germany wants the whole of Europe to withhold tax on savings - a policy opposed by countries like the UK and Luxembourg.