European leaders have launched an audacious bid to create an 'economic government of the EU' - even as they were forced to go cap in hand to the International Monetary Fund for a £20 billion bailout of debt-stricken Greece.

In an extraordinary joint statement the EU's two powerhouses France and Germany called for the EU to be handed sweeping powers over economic policy.

They called for 'strong co-ordination of economic policies' across the EU - including countries like Britain which are not in the euro.

And they suggested the creation of an 'economic government of the EU' headed by Herman Van Rompuy, the obscure Belgian federalist who was plucked from obscurity last year to become the EU's first president.

Under the Franco-German plans Britain would still have a seat at the table setting economic policy, but would be one of only 27 voices.

It could eventually mean the end for Britain's jealously guarded powers to set its own tax and spending plans.

The document says Mr Van Rompuy will head a 'task force' from the member states and the European Central Bank, looking at looking at 'all options' to achieve the legal framework for economic government - which could mean EU treaty changes.

If the idea gains momentum, the treaty changes required alterations to enable EU 'economic government' could be tacked on to Croatia's accession treaty next year.

The power grab came on the most calamitous day in the 11-year history of the euro.

In a humiliating move EU leaders were forced to admit they would need a 'substantial' contribution from the IMF in the event of the Greek economy collapsing and threatening to bring down the euro.

The details were due to be discussed further at a meeting of the leaders of the 16 Eurozone countries last night.

Sources said the Washington-based institution would be asked for £9-£13 billion - dealing a major blow to the credibility of the single currency.

The remainder of the cash will come in the form of loans from other European countries - although Downing Street last night insisted Britain would not be asked to stump up a penny.

The hurriedly agreed deal was stitched up between France and Germany ahead of a summit in Brussels yesterday amid fears that failure to tackle the Greek crisis could bring about the collapse of the euro.

British sources last night said Gordon Brown was relaxed about the idea of greater European economic co-operation, provided it did not result in Britain handing over powers on tax, spending and growth.