British prime minister David Cameron says he genuinely looked to reach an agreement at the EU summit last week, but vetoed a treaty change because it was not in the national interest.
The treaty changes needed the support of all 27 EU members, including those not in the euro, such as Britain, to go ahead.
Mr Cameron told British MPs he negotiated in good faith and his demands were modest, reasonable and relevant.
Mr Cameron has said he vetoed the treaty primarily to protect the City of London - one of Europe's main financial centres - from over-regulation.
But Labour foreign affairs spokesman Douglas Alexander says Mr Cameron's decision will only lead to Britain's isolation in Europe.
The BBC reports it now looks likely that the 26 other members of the European Union will agree to a new "accord" setting out tougher budget rules aimed at preventing a repeat of the current eurozone crisis.
Speaker John Bercow had to intervene on several occasions to restore order.
Mr Cameron repeatedly pressed his Labour counterpart Ed Miliband
on whether he would have signed the Treaty.
He did not directly reply and the BBC reports that Mr Miliband's aides later made it clear he would not have signed it as it stood.
Deputy PM Nick Clegg decided not to take his usual place alongside the Mr Cameron in the Commons. Afterwards, he told reporters that everyone knew he and the prime minister disagreed on the outcome of the summit.
