George Osborne is seeking to block any move by the European Union to put hundreds of millions of pounds of UK taxpayers' money on the line as part of the latest effort to rescue the Greek economy from collapse.
In a series of telephone conversations with counterparts ahead of a meeting in Brussels tomorrow, the Chancellor is said to have made clear that ignoring a 2010 agreement by using the EU budget as collateral against short-term loans for Athens is a "non-starter".
Prime Minister David Cameron declared in 2010 that he had won a "clear and unanimous agreement" that an EU-wide emergency fund would no longer be used to underwrite bailouts of struggling eurozone countries.
Instead responsibility was supposed to fall only on member states using the single currency under a new permanent mechanism specifically set up to deal with crises like that in Greece.
But the deal was not legally-binding and European Commission president Jean-Claude Juncker is reported to be seeking to turn back to the European Financial Stabilisation Mechanism (EFSM) to help provide Athens with desperately needed cash while a new bailout is agreed.
Using the EU budget - of which the UK pays around 14% - to secure 8.6 billion euros in loans to Athens could expose the Treasury to £850 million of liabilities in the event of a default, the Daily Telegraph said.
A Treasury source said: "Our eurozone colleagues have received the message loud and clear that it would not be acceptable for this issue of British support for eurozone bailouts to be revisited.
"The idea that British taxpayers' money is going to be on the line in this latest Greek deal is a non-starter."
Mr Osborne would not be able unilaterally to veto such a move and must rely on the support of sufficient other member states to block it under a system of voting weighted according to relative size.
Treaties allow money to be raised to help an EU member state "seriously threatened with difficulties caused by natural disasters or exceptional occurrences beyond its control".
It was never envisaged for economic crises needing bailouts but was invoked to cope with the Greek and Irish economic collapses, with the UK in the role of guarantor of the loans to the tune of billions of pounds.
In December 2010, Mr Cameron, with the support of France, Germany, Portugal, Spain and Sweden, secured a declaration that the mechanism "need not and should not be used for financial bail-outs".
Downing Street accepted at the time that it was not legally binding, but the PM told the Commons it was stated "in black and white the clear and unanimous agreement that from 2013 Britain will not be dragged into bailing out the eurozone".
A Number 10 spokesman said the PM believed the agreement stood and that there was no proposal on the table to use the EFSM.
"Leaders from across the EU agreed in 2010 that the EFSM would not be used again for those in the euro area, and that remains the Prime Minister's view.
"We have not received a proposal and one is not on the table."
Earlier Mr Cameron welcomed the late night deal which saw Greece pull back from a potentially catastrophic economic collapse.
With his country teetering on the brink of bankruptcy, Greek prime minister Alexis Tsipras agreed to push through a draconian new austerity plan as the price of remaining in the single currency.
Following all-night talks in Brussels with the leaders of the 19-nation eurozone bloc, Mr Tsipras said he had managed to fend off the "most extreme measures" demanded by Greece's creditors.
He must now win the backing of the parliament in Athens for fresh pension, market and privatisation reforms less than two weeks after the Greek people overwhelmingly rejected further austerity in a referendum.
Mr Cameron said that it was in Britain's interest that the deal was now properly implemented.
"What's in Britain's interest is that there is stability in the eurozone and there isn't the threats of uncertainty and instability and I think this deal gives that sort of stability a chance. But obviously there is long way to go to put into place all the things that have been agreed."