BRUSSELS (REUTERS) - European Union officials appeared to have defused a row with London on Wednesday, in which efforts to keep Greece in the euro zone risked fuelling demands in Britain to quit the EU altogether.
A call for EU cash to tide Athens over until a euro zone bailout angered London, three weeks after Prime Minister David Cameron made a formal demand to reform Britain's relationship with the EU.
It became an early test of Brussels' determination to avoid provoking Britain before it holds a referendum on whether to remain in the EU.
One prominent Eurosceptic lawmaker from Cameron's Conservative party called the plan a "slap in the face".
But officials have come up with compromises both sides believe will do two things.
They will provide quick funding for Greece.
And they will guarantee that Cameron can keep a promise made four years ago never to put taxpayer money at risk to rescue countries caught in the euro area debt crisis.
"No one wants to have anything where the UK is backed into a corner," one EU official said.
At one stage, it seemed that a vote by the 19 euro members plus possibly non-euro Poland could have forced Britain to contribute to Greece against its will.
"We're working hard with them on the referendum, so let's not derail that," the official said.
EU chief executive Jean-Claude Juncker has set up a "task force" to handle negotiations with London and also ensure the Brussels administrative machine does not inadvertently clash with Britain before the vote.
The trouble began when the euro zone began work on Monday on a third bailout for Greece.
Officials wanted to find €7 billion (S$10 billion) this week to ensure Athens remains solvent until the three-year loan can be arranged.
Attention focused on a dormant facility known as the European Financial Stability Mechanism (EFSM).
Problem was, its money comes from all 28 EU members.
Telling fellow EU finance ministers on Tuesday that the idea was a "non-starter", Britain's George Osborne said the euro zone must "foot its own bill".
Aside from a billion or so euros that would be Britain's share, the government objected in principle to being drawn in to the troubles of a single currency area from which Cameron is now seeking further guarantees of separation.
Cameron made the point again in parliament on Wednesday.
But by then British officials were voicing confidence in proposals by the EU executive to set up an EFSM loan to Greece so they guaranteed no loss for Britain.
The solution, likely to be confirmed on Thursday when EU finance ministers hold a teleconference, indicated a willingness by the British government, EU institutions and other member states including euro zone paymaster Germany to defuse tensions.
European Commission Vice-President Valdis Dombrovskis said among options was setting aside money earmarked for Greece that is held at the European Central Bank.
He also conceded there were questions on the legality of using the EFSM.
But he said there were no good options to get money to Athens within days.
Cameron has said he does not want to leave the EU but wants a number of reforms, particularly on relations with the euro zone and on curbing immigration to Britain from EU countries.
He has promised voters a referendum by 2017.
The prospect of "Grexit" - Greece being forced out of the euro zone - is already worrying EU leaders.
They see it as a sign the Union is in trouble, and most are anxious to avoid "Brexit" from the EU, which would deprive it of its second-biggest economy.