The leaders of most European Union nations agreed last month to work towards a new "fiscal compact" after governments breached the existing toothless budget rules for years, ignoring a deficit limit of 3.0 percent of gross domestic product and debt ceiling of 60 percent of GDP.

Britain is the only member of the 27-state European Union to have refused to join the effort to deepen integration, angering its partners.

The intergovernmental accord being drawn up notably aims to enshrine a "golden rule" of balanced budgets into national constitutions.

The pact is to be finalised this month and signed in March.

The latest version of the text was handed out to the 26 governments involved on Tuesday.

It varies in one important aspect from a draft that was circulated in early January.

The role of the European Commission, the EU's Brussels-based executive arm, is lessened, handing more of the responsibility back to the national capitals to police each other.

In the earlier version, the Commission would have gained the power to take a eurozone state to court for breaking the "golden rule" budget limits.

Under the latest version, it will be the job of the "contracting parties" -- the individual European nations -- to take a fellow member to the European Court of Justice if it is concerned about a breach in the rules.

The previous thinking, with the European Commission given the key role, was difficult for some nations, notably France, to swallow.

Paris has from the start sought to avoid giving the European Court in Luxembourg the power to punish eurozone governments over their annual budgets, while Germany saw this is a useful tool.

The tweaked version is seen as a compromise between the two positions, although the whole text remains subject to more changes before the end of the month.

Another easing of the draft text rules out introducing new quasi-automatic financial sanctions for countries that break rules on overall public debt, deciding instead to limit such penalties to ballooning budget deficits.

The idea of extending sanctions to debt was fiercely contested by countries such as Italy where the debt level is around 120 percent of annual economic output, twice the agreed maximum.

Another key point to be decided is exactly how many of the countries involved need to ratify the new agreement before it comes into force. As this will not be a fully-fledged EU treaty, thanks to Britain's withdrawal, there is no existing rule to be applied.

An earlier version allowed for just nine countries to trigger the new pact. This was seen by some as being insufficient and the number was hiked to 15 nations early this month.

The new draft version envisages a half-way house of 12 national ratifications, illustrating the remaining differences in opinion.

Copyright AFP (Agence France-Presse), 2012