It was just after 6.20am in the British briefing room of the Justus Lipsius summit centre in Brussels and the Prime Minister was ending almost 12 hours of intense diplomatic turbulence.

Cameron arrived in Brussels at 6pm on Thursday, fresh from watching his son Elwen in his school's nativity play. Just before 7pm he arrived at the summit and went into a meeting with Mario Monti, Italy's Prime Minister.

That meeting was described as ''short and sweet''. The next one was neither.

For 45 minutes, Cameron met the French President, Nicolas Sarkozy, and the German Chancellor, Angela Merkel, the Franco-German partnership now widely known by the portmanteau ''Merkozy''.

Merkel and Sarkozy are the motor driving plans for a fiscal union between the 17 euro zone states, a union that will require a new treaty.

In exchange for backing that treaty among all 27 EU members, Cameron wanted promises that

the City of London would be shielded from future EU financial regulation. That demand was a product of the growing insistence by Conservative MPs that their leader should not return from Brussels empty-handed.

Even before Cameron arrived, the French had given his claim short shrift: as a country outside the euro, Britain had no right to claim special favours.

Some of France's objections were couched in decidedly undiplomatic language: one source likened Cameron's position to a man attending a wife-swapping party without his spouse. Yet Tory MPs were being equally evocative, with one warning the PM not to return with a ''piece of paper'' and an empty promise, like Neville Chamberlain arriving home from appeasing Adolf Hitler in 1938.

In the Merkozy meeting, Cameron made clear the pressure on him. If he did not return with concessions for his party, he could not promise that Conservative MPs would pass legislation now before Parliament to ratify the euro zone bailout fund due to be launched in 2013.

Britain will not pay into the European Stability Mechanism but, as an instrument of the EU, British ratification is required for it to come into being.

British officials insisted that it was not a threat, merely a statement of political fact, but in the febrile atmosphere of the summit, even the perception of such a threat against a key element of the euro zone rescue could be dangerous.

The simmering tension over Cameron's demand was put on hold as all 27 leaders sat down to a dinner of soup, cod, chocolate cake and ice-cream, and a conversation meant to end the crisis.

With 27 politicians around the table speaking several languages, conversation cannot flow. For almost four hours the leaders debated the details of the Franco-German plan. Only after 1.30am did the talk turn to just how it would be enacted under Europe's complex laws.

Most leaders wanted a new EU treaty, signed by all 27 members. Most, but not France. Paris had been pushing for a deal among the 17, excluding Britain and its ''Anglo-Saxon'' free-market influence.

The French position was well known, and British officials insist Cameron was ready. He made his pitch: I'll sign a new treaty, in exchange for some ''very reasonable'' assurances on financial services.

In an offer that would have angered some Tories, the British demands were decidedly modest. By being so reasonable, Cameron hoped to win German backing. Other countries would follow and Sarkozy would have no choice but to fall in line.

After 2am, it emerged that hope was forlorn. Merkel caught the British by surprise with an adamant rejection of Cameron's demands.

Not long after 5am, Sarkozy had the first public word, blaming Britain and Cameron's ''unacceptable'' demands. At 6.19am Cameron, unnervingly composed for the hour of day, strode into the briefing room to explain his decision.

Merkel returned to the summit with cutting remarks about Cameron, suggesting that he had not been negotiating in good faith. ''I really don't believe David Cameron was ever with us at the table,'' she said.

Soon before leaving Brussels at 3pm, Cameron discussed the summit with reporters. Recalling how he made his ''very reasonable asks'' to the meeting, he banged his hand on the table for emphasis. And far from following Benjamin Disraeli's policy of splendid isolation in Europe, he insisted that Britain would remain engaged in the EU, for as long as he judged to be in the national interest.

Eyes glinting with mischief, he insisted that his dealings with Sarkozy had been ''good-natured and reasonable'' at all times. But he added: ''I have not and have no intention of attending any wife-swapping parties.' '

Telegraph, London