Gordon Brown last night attempted to fend off EU proposals for the creation of pan-European supervisors that would have the power to force governments to bail out struggling banks and financial institutions.

The Prime Minister insisted Britain should retain control over all decisions that have direct fiscal consequences. However, he will come under pressure during a summit of EU leaders to surrender ultimate control to a European system of supervisors.

The system is a key part of the EU’s effort to restore confidence in markets and most European leaders want to push ahead with a new two-tier supervisory system under the model proposed by Jacques de Larosière, a former Bank of France governor.

Mr Brown is under pressure to follow through on promises of greater international controls by allowing three new European authorities to oversee cross-border banking, insurance and pensions, and securities sectors, and to mediate in disputes between member states.

He will agree to the creation of another body, the European Systemic Risks Council, which will act as an early warning mechanism for potential bank failure. But Mr Brown is also determined to stop the chairmanship being handed to the European Central Bank, which a number of countries outside the eurozone feel would put them at a disadvantage.

British diplomats have been urging caution against a rush towards regulation and Mr Brown yesterday arrived in Brussels for the two-day summit to persuade fellow EU leaders, including Nicolas Sarkozy of France and Angela Merkel of Germany, to water down the proposed powers of the European supervisors.

Finance ministers last week agreed the binding nature of rulings from the three new economic authorities, but Alistair Darling emerged from that meeting in Luxembourg to announce that he had won assurances that no decisions would affect the fiscal responsibilities of member states.

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