The president of the EU Council, Herman van Rompuy, says all EU countries except Britain are considering joining a new agreement on fiscal integration.

He was speaking after marathon overnight talks in Brussels after which European leaders vowed to enforce budget discipline to tackle the debt crisis. He told reporters the deal would be "as binding as possible".

After two years of foot-dragging on deepening integration, 26 of the 27 EU states signalled their willingness to join a "new fiscal compact" to resolve the two-year debt crisis threatening to crack apart the monetary union.

But the deal came with a heavy political price when non-euro Britain resisted a Franco-German drive to enshrine new budget rules in a modified EU treaty.

"The British were already not in the euro and in that respect, we are used to this situation," German Chancellor Angela Merkel said as talks resumed earlier today.

Merkel said she was "very pleased" most had agreed the "fiscal compact" that plans to impose near automatic sanctions on debt and deficit delinquents. "We have learned from the mistakes of the past," she said.

The 17 euro zone nations signed up to the pact while nine other EU nations, "indicated the possibility to take part in this process" after consulting their parliaments, EU leaders said in a statement. Hungary had originally voiced reluctance, while Sweden and the Czech Republic were undecided.

The new deal, to be adopted by March, was put to the entire 27-nation bloc in the interests of maintaining unity.

The accord is to include automatic sanctions for breaking budgetary rules. Some leaders hope this will spur the European Central Bank to step up its role in the crisis after ECB president Mario Draghi had called for a "new fiscal compact" last week. Draghi dubbed the summit decisions a "very good outcome" for the euro zone.

Reports later said the European Central Bank had capped the maximum purchase of euro zone sovereign bonds at €20 billion a week for now and was not considering bigger action.

The news initally put more pressure on Italian and Spanish bonds, but they steadied this evening. Italian 10-year yields were slighly lower at 6.82% and Spanish yields were little changed at just under 5.8%.

French President Nicolas Sarkozy said British Prime Minister David Cameron's bid to halt ongoing EU efforts to curb the City of London's huge financial services sector was "unacceptable".

"Where we can't be given safeguards, it is better to be on the outside," retorted Cameron.

A square mile in central London is home to 75% of Europe's entire financial services industry, but the British government is resisting French and German moves to impose a financial transactions tax, as well as new regulations controlling trading.

AG to look at referendum need - Kenny

Taoiseach Enda Kenny has said the Attorney General will assess whether or not the Government needs to hold a referendum on a new inter-governmental treaty which a possible EU 26 member states will sign next March.

He would not be drawn on how long the process would take or whether he thought the Government would win such a referendum.

The new arrangements - excluding Britain - were agreed in the early hours of this morning at a summit of EU leaders which Mr Kenny described as "exhausting."

Up to 26 member states could take part in the new so-called Fiscal Stability Union, in which countries would submit to much deeper fiscal discipline and broader co-ordination of economic policies.

The Taoiseach also confirmed that the government would introduce a fiscal responsibility law next spring which would be in keeping with the new "Golden Rule" on fiscal discipline to be enshrined in the new arrangements.

Mr Kenny said the meeting had increased the firewall opportunities to prevent contagion from the Greek debt crisis from spreading to bigger economies like Italy and Spain.

He welcomed the decision to bring forward the permanent EU bail-out mechanism the European Stability Mechanism (ESM), which will replace the existing bail-out fund, the EFSF.

The Taoiseach said the decision to withdraw any reference to private creditors suffering future haircuts under the ESM treaty was positive, since it would encourage such creditors to lend to Ireland in 2013, when the Government hopes to return to borrow on the open markets.

Mr Kenny said leaders had agreed last night to lend €200 billion to the IMF, which could in turn be used to help countries in difficulty. He said Ireland would not be required to contribute to that amount, although he confirmed that the Government would be contributing €250m to the new ESM fund, as originally agreed. This would not affect Ireland's budget deficit, he said.

The Taoiseach said he also made a strong case for Ireland to be given some support in reducing the cost of the bank recapitalisation which took place before the country entered the bail-out programme.

Mr Kenny said the cost of bailing out banks was €63 billion which, he said, had to be paid back at much higher rates than had been agreed under the revamped EFSF mechanism.

Ireland's decision to recapitalise banks at the time had prevented contagion spreading to Europe, he said. He said his counterparts had acknowledged this fact.

Mr Kenny said the decision by the UK to remain outside the new inter-governmental arrangements would not affect Ireland's International Financial Services Centre (IFSC).

When asked if the new arrangements could see a move by other members such as France to harmonise corporation tax systems, he repeated that Ireland's corporate tax rate had been secured and that guarantees to that effect from 26 other member states were legally binding.

No agreement on euro bonds - Van Rompuy

The president of the European Union, Herman Van Rompuy, said today that no accord had been struck on pooling the debts of euro zone countries that many see as the best way out of the euro crisis.

"We haven't an agreement on this issue," said Van Rompuy, asked about the controversial topic of eurobonds after an EU summit dubbed the last chance to save the euro.

However, he said he and other top EU officials had been given a mandate to "continue our work" on deepening integration among the euro zone countries. "We will discuss this issue again hopefully in calmer waters," said Van Rompuy.

Several analysts see eurobonds as the only solution to a crippling debt crisis that has threatened to tip the euro zone into a recession, but Germany is strictly opposed to such a move.

In a surprise move that angered Berlin, Van Rompuy reintroduced the idea in proposals made ahead of the summit.

In addition, French President Nicolas Sarkozy announced at a separate news conference that Europe's future bail-out fund, the European Stability Mechanism, would not be given a banking licence, in another apparent victory for Germany.