David Cameron's move to veto EU treaty change has been welcomed as a "very significant" development by eurosceptic Tory MP Mark Reckless who said it should be the start of a new more distant relationship.
But former foreign secretary Lord Owen accused the Prime Minister of leaving the UK "in a mess" that called into question the credibility of the coalition Government with the Liberal Democrats.
Mr Reckless told BBC Radio 4's Today programme: "The Prime Minister has been as good as his word.
"He said he would not agree to a new treaty unless he was able to safeguard the interests of the City. The other EU countries would not agree to safeguard the interests of the City and therefore David Cameron has said no. I think this is a very significant change. All of us will need time to see how the institutions of Europe are going to move forward."
Social Democratic Party founder Lord Owen said: "Why has the Government allowed us to get into this mess? Have we been coherently governed over the last few months? Is this coalition able to really represent British interests or are we being driven by about 80 to 90 Conservatives who really want us to get us out of the European Union?"
Business Secretary Vince Cable told Sky News: "Hundreds of thousands of British jobs depend on the eurozone crisis being resolved. I think they will do that but we will see what happens over the next few days. The key national interest we are trying to protect here is the single market, which very large numbers of British jobs depend on in all sectors of the economy in all parts of the country."
UK Independence Party leader Nigel Farage said: "The real debate on the European Union in Britain is about to begin. Whether David Cameron knows it or not, his actions last night (Thursday) marked the beginning of the end of Britain's membership of this union. I expect in the coming weeks and months for there to be an overwhelming demand in Britain for an in/out referendum."
Jan Zahradil, the chairman of the European Conservatives and Reformists group to which Tory MEPs belong in the European Parliament, congratulated Mr Cameron and Czech Prime Minister Petr Necas for declining to sign up to the proposed treaty. Czech MEP Mr Zahradil said: "In a difficult atmosphere, they defended the interests of their citizens and their constituents."
Ed Miliband said that the outcome of the summit was "increasingly worrying for the UK". Writing in the Evening Standard, he said: "There are simple lessons to learn from the Prime Minister's failure last night - If you get out of the deal-making room as he has done over the last year, you end up losing influence. Having no allies is a sign of weakness, not of strength."
Shadow Chancellor Ed Balls said Mr Cameron had found himself completely isolated after focusing on "appeasing his own backbenchers". He added: "Rather than glorying in isolation, our Prime Minister should have been building alliances to get political backing for the European Central Bank to act as lender of last resort, which is urgent and imperative to restore market confidence, as well as a plan for jobs and growth across Europe to break out of the current austerity straitjacket."