Deputy Prime Minister Nick Clegg has launched an attack on David Cameron for "isolating" the UK in Europe with his veto of changes to the EU treaty.
Sources close to the Liberal Democrat leader said he did not feel the failed eurozone crisis negotiations had resulted in a good deal for the UK.
The BBC understands Mr Clegg was dismayed when he was woken early on Friday to hear of the PM's decision.Initially Mr Clegg said the coalition government was united in its position.
But now sources close to him have confirmed that he "doesn't think this is a good deal for Britain".
Mr Clegg "couldn't believe it", they said, when he was told the summit in Brussels had "spectacularly unravelled".
BBC political correspondent Robin Brant says the comments linked to Mr Clegg mark a considerable change in tone from Friday when he said he and Mr Cameron had worked together on the UK's negotiating stance.
This will add to existing tensions over Europe in the coalition, our correspondent adds.
The prime minister blocked changes to the EU's Lisbon Treaty at an EU summit, arguing that the proposed changes were not in the UK's interest.
It now looks likely that all 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.
The Independent on Sunday quotes a source "close to Mr Clegg", as saying: "Nick certainly doesn't think this is a good deal for Britain, for British jobs or British growth.
"It leaves us isolated in Europe and that is not in our national interest. Nick's fear is that we become the lonely man of Europe.
"He could not believe that Cameron hadn't tried to play for more time. That is not how Nick would have played Britain's hand."
The paper also quotes a Lib Dem source who says that if the Conservatives "think we can now go back to Europe with a sackful of demands about repatriating powers, they are living in a fantasy world".'In a bad place'
Meanwhile, Lib Dem Business Secretary Vince Cable told the Sunday Telegraph Britain had "finished in a bad place" at the EU summit.
He said CBI director general John Cridland, who questioned whether the UK would be able to stop new financial regulations, had given a "good assessment".
But he told the paper: "I am not criticising the prime minister personally. Our policy was a collective decision by the coalition."
Ken Clarke, the Justice Secretary and a long-time europhile, told BBC Radio Nottingham: "It's a disappointing, very surprising outcome.
"There will be a big statement made by the prime minister on Monday where I shall be sitting listening, and I shall be discussing what we are going to do now."
But Foreign Secretary William Hague said Mr Cameron had done the "right thing for Britain".
He told the Sunday Telegraph: "Our requests were moderate, reasonable and relevant, given the potential spill-over from fiscal to financial integration...
"We did not go to Brussels seeking a row... But it is better to have no change to the EU treaties than a change that did not protect our interests."
On Saturday Chancellor George Osborne said Mr Cameron's decision to veto changes to the treaty had "helped protect Britain's economic interests".
"We have protected Britain's financial services, and manufacturing companies that need to be able to trade their businesses, their products, into Europe," he said.
"We've protected all these industries from the development of eurozone integration spilling over and affecting the non-euro members of the European Union."
Labour leader Ed Miliband has said the UK will now be excluded from key economic decisions in Europe, while UK Independence Party leader Nigel Farage has said the outcome was "the worst of all worlds" for the UK, leaving the country in Europe but without power.
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