David Cameron is travelling to Brussels for talks on allowing Britain to curb in-work benefits for migrants – with the permission of other EU nations.
The so-called “emergency brake” plan is aimed at breaking the deadlock in Mr Cameron’s EU renegotiations.
He told the BBC that progress was being made but there was “a long way to go” before he could agree to the plan.
But Tory Eurosceptic John Redwood said the “emergency brake” was “an insult to the UK” and “just a sick joke”.
The prime minister, who is meeting European Commission president Jean-Claude Juncker later, is hoping to get an agreement next month to pave the way for an in-out referendum this year.
Mr Cameron wants to prevent migrants from other EU nations from claiming tax credits – income supplements paid to those in low-paid work – for four years, which he says will help reduce high levels of immigration to the UK.
He is thought to have backing for his other three negotiating demands – but the benefit restrictions are being resisted by Central European member states, who view it as discriminatory against their citizens.
Analysis by the BBC’s Europe editor Katya Adler
The idea of the emergency brake has been on and off the table ever since David Cameron started trying to renegotiate the UK’s relationship with the EU.
Arguably, he wanted an emergency brake on EU migration full stop. He’s watered that down for it to focus on in-work benefits for up to four years.
The current idea would be that Britain could initiate a request for this emergency brake for up to four years if it could prove Britain’s social and welfare system is under excessive strain from immigration.
But that brake would have to be approved by the majority of other EU member states – and of course, right from the beginning, they have been opposed to suspending benefits for other EU migrants.
One of the founding principles of the EU is the freedom for every EU citizen to live and work as equals anywhere in any EU member state, so they don’t like it.
At the end of the day, these other countries want Britain to stay in the EU. It could be that they just hold their nose and say yes to the deal, or it could be there’s a lot of European fireworks ahead.
Some EU nations have floated the idea of an “emergency brake” on immigration, that would allow member states to temporarily close their borders to stem abnormally high migration flows.
But now the term is being applied to a plan to allow member states to restrict in-work benefits for two years initially, with the possibility of a further two-year extension, if it can be proved that their welfare systems are under intolerable strain due to immigration.
The European Commission would perform tests on whether a brake on benefit payments was acceptable, but final approval would rest with a majority decision of the union’s 28 states.
Mr Cameron told BBC Radio Scotland that the EU was responding to the UK’s demands and what was being proposed was “totally different” to what had been mooted in the past.
“There is going to be a lot of hard talking, but it is encouraging that what I was previously told was impossible – is now looking like it is possible,” he said.
But he cautioned that the proposals on the table at the moment were “not yet strong enough”.
“There is still a long way to go before we see something we can actually agree… I won’t agree to something unless it has the force and the weight that we need to solve the problems that we have.”
Mr Cameron said he had already taken action to restrict access to out-of-work benefits and he was also confident of agreement on stopping EU nationals claiming child benefit for dependants living abroad.
The BBC’s political editor Laura Kuenssberg said the negotiations were approaching “crunch” time and Downing Street was willing to walk away if it did not get what it wanted.
She said there were questions about how effective the so-called brake would be and whether, in isolation, it would be enough for Mr Cameron to recommend the deal to the British people.
What are in-work benefits and who claims them?
The Department for Work and Pensions does not collect figures on the number of non-UK nationals claiming benefits at any given time.
But according to figures from the House of Commons published in November 2014, there were at the time 252,000 working families from the European Union claiming tax credits, the main type of in-work benefit.
Working tax credits are payments designed to top up the income of those in low-paid jobs and who work a minimum number of hours.
The report suggested there were also 48,000 single people from EU countries claiming tax credits.
Working tax credits will eventually be replaced by universal credit, a single consolidated payment currently being rolled out across the UK.
Mr Redwood, who is part of Conservatives for Britain, a group campaigning to leave the EU, told the BBC the brake proposal fell “well short” of the need for Britain to regain control of its borders .
“It says we have to beg, in extreme circumstances, for the permission of the rest of the EU to not make payments we don’t want to make – it’s simply a bad joke,” he said.
He said the prime minister had “got to do better than offer a feeble emergency brake that won’t work”.
Conservative MP Nick Herbert, who backs the PM’s stance of wanting to remain in a “reformed Europe”, said what “the middle ground of opinion” wanted from the negotiations were effective measures that would address “the unnatural draw” of migrants to the UK.
“If there is a lever that can be pulled soon enough and will operate for long enough and would be a tough and practical measure, that would address our concerns,” he told BBC Radio 4′s Today programme.
Downing Street sources urged caution over reports of any breakthrough, saying Friday’s talks would look at the “totality” of the renegotiations, not just migration and welfare.
Mr Cameron is also due to have a working dinner with European Council President Donald Tusk in Downing Street over the weekend, and will hold talks with German Chancellor Angela Merkel before an EU summit on 18 February.
David Cameron’s four main aims for renegotiation
- Integration: Allowing Britain to opt out from the EU’s founding ambition to forge an “ever closer union” so it will not be drawn into further political integration
- Benefits: Restricting access to in-work and out-of-work benefits to EU migrants. Specifically, ministers want to stop those coming to the UK from claiming certain benefits and housing until they have been resident for four years
- Sovereignty: Giving greater powers to national parliaments to block EU legislation. The UK supports a “red card” system allowing member states to scrap, as well as veto, unwanted directives
- Eurozone v the rest: Securing an explicit recognition that the euro is not the only currency of the European Union, to ensure countries outside the eurozone are not disadvantaged. The UK also wants safeguards that it will not have to contribute to eurozone bailouts
Referendum timeline: What will happen when?