British Prime Minister David Cameron suffered his first significant parliamentary defeat on Wednesday after rebels in his Conservative party joined the Labour opposition to demand a cut in the EU budget.

A House of Commons motion urging Cameron to hold out for the real terms cut in the bloc's trillion-euro 2014-20 budget at a Brussels summit next month was passed by 307 votes to 294.

While not binding, the vote is the first such defeat for the coalition government comprising the Conservatives and the smaller Liberal Democrats, and a humiliation for the prime minister.

Cameron had sought to head off the rebellion by threatening to veto any above-inflation increase of the European Union budget, which has become increasingly contentious as austerity measures bite across the continent.

During a heated exchange in parliament earlier on Wednesday, the premier accused Labour leader Ed Miliband of "complete opportunism" for supporting a motion brought by his political foes, eurosceptic Conservatives.

Cameron had sought to rally Conservative loyalists, telling the House of Commons: "This government is taking the toughest line in these budget negotiations of any government since we joined the European Union.

"At best we would like it cut, at worst frozen, and I'm quite prepared to use the veto if we don't get a deal which is good for Britain.

"But let's be clear, it is in our interest to try to get a deal because a seven-year freeze would keep our bills down compared to annual budgets", which may be required if no long-term budget is agreed next month.

Mark Reckless, one of the leading Conservative rebels, said before the vote that he hoped the government would accept the parliamentary motion.

"Then David Cameron can go to Brussels, as (former Conservative prime minister) Margaret Thatcher went before him, as head of a united parliament to represent our interests in Brussels and to say when we are seeing such cuts at home there should be at least some reduction in the EU," he said.

The revolt puts renewed pressure on Cameron after months of blunders and u-turns by the coalition government, which is halfway through its five-year term, and whisperings of a possible leadership challenge.

Europe has caused ructions in the Conservative party for decades but it is also likely to be an issue in the next general election, scheduled for 2015, amid growing scepticism among Britons generally about their country's relationship with the EU.

Cameron warned European Council president Herman van Rompuy at talks in London last week that Britain, which does not use the euro currency, could not support a sharp increase in the EU budget.

The Commission wants a budget of €1.03-trillion ($1.33-trillion), up 5.0 percent on 2007-13, but seven major contributor states have balked at the increase at a time when they are having to cut spending at home.

It rejected on Tuesday a €50-billion cut suggested by Cyprus, the current holder of the EU's rotating presidency.

But Germany and France have joined Britain in insisting that the EU cannot expect to get more when they have to make do with less, demanding cuts in the 2014-20 budget of €100-billion or more.

In December, Cameron dramatically parted ways with Brussels over the EU's fiscal compact, which laid down the lines for tighter EU fiscal policy coordination amid the eurozone crisis.