Tony Blair has signalled readiness to give up part of the UK's £4bn European Union rebate for a new EU budget deal.
Tony Blair: Big states should pay in a similar share of national income
The offer comes without any fundamental reform of farm subsidies being agreed, although Mr Blair believes he can still do battle on this issue.
The UK may have to increase the amount it pays into the EU but the exact figures will be published next week.
Conservatives' Europe spokesman Graham Brady said it was "a surrender" and that the government had changed stance.
Mr Blair, who is in the Baltic for EU talks, says the UK must pay its fair share of the costs of EU enlargement.
It is believed a "slightly smaller" rebate will be proposed as a way of the UK making a "contribution to the cost of EU enlargement".
Under the terms of the proposed deal, the UK would not receive any rebate from poorer countries in central and eastern Europe.
The BBC's political editor Nick Robinson said: "In layman's terms (that) is the same as giving up part of the rebate".
Mr Blair has previously refused to compromise on the rebate, telling prime minister's questions in June: "The UK rebate will remain and we will not negotiate it away. Period."
Attempts last June to reach a deal on the budget collapsed when the UK rejected calls to give up the rebate.
The UK government argued that any cut to the £4bn (6bn euro) rebate - won by Margaret Thatcher in 1984 - should not come without a major reform of farm spending.
At a press conference in Estonia on Thursday, Mr Blair said he had not given up on cuts in the Common Agricultural Policy, but said that he wanted a more "rational" budget to take account of the fact that agriculture was not the main part of most developed economies.
Mr Brady told Radio 4's PM programme: "Before the general election there was an absolutely solid pledge the rebate would be maintained, then there was an offer it would be given away but only in return for solid fundamental reform of CAP, and now finally we see part of the rebate with nothing concrete in return at all."
Speaking after talks with German Foreign Minister Frank-Walter Steinmeier on Thursday, Mr Straw denied the prime minister was negotiating a "significant reduction" in Britain's rebate.
He said: "We have always made clear that we are not going to negotiate our rebate away but we have always acknowledged our responsibility towards the accession states who are that much poorer."
Mr Straw said it was in Britain's interests to have the living standards of the new member states "levered up" in the same way as Portugal, Spain and Ireland in the past.
Earlier, Mr Blair predicted that he would be "attacked from all sides" as he tried to promote a budget deal that cuts aid to the EU's new member states.
Speaking in Kiev before flying to the Estonian capital, Tallinn, Mr Blair said: "If we cannot get a large deal, which alters fundamentally the way the budget is spent, then... we will have to have a smaller EU budget.
"None of this is going to be easy... Meantime, I will get attacked, probably from all sides, but then... that is part of political leadership."
According to the Reuters news agency, leaders of nine of the 10 countries have signed a letter to Mr Blair which states: "We will not be prepared to accept reductions in allocations for the new member states."
The agency says the one country that has not signed the letter is Slovakia, to which the UK has reportedly promised extra funds for decommissioning nuclear power stations.
The UK proposal will be discussed by EU foreign ministers on 7 December, and by heads of state and government at a summit in Brussels on 15 and 16 December - two weeks before the UK ends its presidency.
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