Germany has threatened to call a conference to draft a new EU treaty without Poland's consent, as talks at a summit in Brussels reached an impasse.
Poland says new voting plans give too much influence to Germany
German Chancellor Angela Merkel's spokesman said Poland could "join the consensus" later after it continued to object to a proposed new voting system.
Late on Friday, officials at the summit said Warsaw was close to compromising.
The talks aim to agree on a treaty to replace the failed EU constitution, which was rejected by voters in 2005.
The Netherlands and Britain have already got what they wanted, says the BBC's Europe correspondent, Jonny Dymond, in Brussels.
Britain's "red lines" are guarantees that the Charter of Fundamental Rights, which could give workers extra rights to strike, will not apply to the UK.
Britain also wants to maintain national control over foreign policy, justice and home affairs.
The Netherlands wants the role of national parliaments to be strengthened and the criteria for new members joining the EU to be included in the treaty.
AIMS OF THE SUMMIT
To replace, and reduce, the EU constitution rejected by French and Dutch voters in 2005
To simplify voting procedures in an expanded EU
To replace the six-month rotating presidency of the EU with a full-time figurehead, chosen by members
A foreign policy supremo to give the EU increased weight on the international stage
That leaves the Polish demands for a radical rethink of the new voting system - which Warsaw says would give too much influence to Germany - under consideration.
A British spokesman said the latest proposal involved a new system being fully adopted by 2017 - a delay of 10 years.
The spokesman said there would be no change until 2014, then a three year transition period until a "double majority" system was adopted.
This would require not just a 55% majority of EU countries for a change to be approved, but also at least 65% of the bloc's population.
Earlier, a preliminary agreement struck in Brussels with the Polish President, Lech Kaczynski, was blocked by his twin brother Jaroslaw, the prime minister.
Speaking on Polish television, Jaroslaw Kaczynski said talks "had hit a wall".
Mrs Merkel, who holds the EU presidency until the end of June, said that in the light of the Polish rejection it was important to take action to avoid "leaving Europe to mark time".
Our correspondent says the move by the German government is a sign of their frustration.
The inter-governmental conference it has threatened to call is the body that is charged with drafting the EU's reform treaties, traditionally created with the unanimous agreement of member states.
To do so without Poland's agreement is almost inconceivable, our correspondent says.
Diplomats are being very cautious about the German proposal, described as quite premature by one, while others say the suggestion is designed simply to put pressure on Poland.
Various solutions have been offered to try to overcome Poland's objections to the new voting system.
As President Kaczynski continued tough talks in Brussels, his brother said the offer on the table, that would have delayed introducing a new voting system for seven more years, was "far too little to be acceptable".
Speaking live on Polish television, Jaroslaw Kaczynski said Poland was open to compromise but that "one cannot give way all the time".
Earlier, the UK and others asked for clarification on why reference to the EU's commitment to free competition had been dropped from the draft treaty at the request of the French.
"The notion that this in any shape or form changes the legal basis of the internal market and the way the European economy works and the Commission's powers in relation to it is wrong," said Mr Blair, adding that a protocol would be added to the treaty.
EU leaders have struck other compromises, including the job title of a new EU foreign policy chief.
The post-holder will not be called a minister, as in the European Constitution, but High Representative of the EU, and will combine the job of the vice-president of the European Commission, which comes with a significant aid budget and staff.
A draft treaty submitted for debate at the summit makes several concessions to EU member states that had opposed key parts of the planned constitution.
Proposed changes include:
- Removing any mention of the word "constitution"
- Providing countries with a chance to opt out of EU policies in the area of policing and criminal law
- New voting system to approve decisions
- Full-time president of European Council instead of current system where members take six-month turns
- New foreign affairs head and a smaller commission
Correspondents say failure to reach a deal on the treaty would plunge the EU into a fresh crisis as deep as the one that followed the rejection of the constitution two years ago.