George Osborne: "We're not exiting the European Union"
Chancellor George Osborne says David Cameron's decision to veto changes to the European Union treaty has "helped protect Britain's economic interests".
He said the country's financial services and manufacturers had been protected from "eurozone integration spilling over" to non-euro members.
Labour said the UK risked being left out of discussions affecting the country's future.
Senior Lib Dem Simon Hughes urged Eurosceptic Tories to "calm down".
The prime minister blocked changes to the EU's Lisbon Treaty at an EU summit that ended in Brussels on Friday.
It now looks likely that all 26 other members of the European Union will agree to a new "accord" setting out tougher budget rules.
Intense scrutiny
Mr Osborne told BBC Radio 4's Today programme that Mr Cameron made a tough decision that was "the right one for Britain".
"We have protected Britain's financial services, and manufacturing companies that need to be able to trade their businesses, their products, into Europe.
"We've protected all these industries from the development of eurozone integration spilling over and affecting the non-euro members of the European Union."
Mr Osborne said Mr Cameron's veto was not "some sort of secret negotiating position" and that he had done "exactly what he said he was going to do".
'New relationship'
Mr Cameron is facing intense scrutiny over his veto and there are calls from some Eurosceptic Tories to renegotiate the country's relationship with the EU.
Senior backbencher John Redwood claimed there was a "hard core of at least 45" rebel Tory MPs who would not back the coalition if asked to vote for "unsuitable EU measures" in the future.
"Now the UK is confirmed as being out of the room on euro matters... the UK government needs to turn its mind and energy to negotiating a new relationship with the EU," he wrote on his blog.
He said that the eurozone countries and the UK had "thoroughly different aims".
Lib Dem deputy leader Simon Hughes denied any rift between his party and the Conservatives, saying there was no possibility of a renegotiation with the EU during this parliament.
He said: "There is no such proposal, there won't be such a proposal, there won't be a negotiation of treaties. They should calm down.
"There will not be an opportunity for them to pull us further away from Europe. That's off the table."
He said he "regretted" that an agreement had not been reached that would allow all 27 EU countries "to be together on all issues", but he "accepted" Mr Cameron's judgement that the offer was not acceptable.
Michael Fallon, deputy chairman of the Conservative Party, said the UK did not want its tax and spending decisions to be made in Brussels and it wanted to stay out of decisions on the euro currency.
He said the UK would "still play a full part at all the major EU meetings that look at the internal market, and how the market works for business - that's important for British jobs".
'Floating into Atlantic'Former Deputy Prime Minister and Lord Heseltine earlier told the Today programme that the political situation meant it would have been impossible for Mr Cameron to have agreed to treaty changes.
"He didn't sign and he couldn't have signed because he hasn't got a parliamentary majority today to take us down that road," he said.
But the Conservative peer, one of his party's most pro-European figures, said Mr Cameron's move had not safeguarded the City, which was his stated priority.
"They (the Europeans) could theoretically create rules for the eurozone which would make it difficult to trade outside it in financial service activities and that's the fear," Lord Heseltine said.
"In saying that he wanted to protect the interests of the City he was agreeing that there were interests to protect, and there's no way you can protect those interests by floating off into the Atlantic."
Labour leader Ed Miliband said the UK would now be excluded from key economic decisions, while UK Independence Party leader Nigel Farage said the outcome was "the worst of all worlds" for the UK, leaving the country in Europe but without power.
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