By Alastair Macdonald
BRUSSELS (Reuters) - The man leading EU negotiations with Britain on reform of the bloc said on Monday there was a "strong will" to reach a deal but no agreement on a key British proposal aimed at curbing immigration from the rest of the bloc.
In a letter to EU leaders ahead of a summit he will chair next week, European Council President Donald Tusk urged the other 27 to answer British Prime Minister David Cameron's concerns swiftly because uncertainty over a planned referendum on Britain leaving the EU was "destabilizing" the Union.
"Consultations have shown that the issues raised by the British prime minister are difficult. At the same time there is a strong will on the part of all sides to find solutions that respond to the British request while benefiting the European Union as a whole," wrote Tusk, whose staff conducted talks with all member states following Cameron's formal demands on Nov. 10.
Cameron has promised to hold a referendum on whether or not to stay in the European Union before the end of 2017.
The most problematic of the issues Tusk listed is a British proposal to deny welfare benefits to EU citizens working in Britain for the first four years they are there -- something numerous leaders and officials have said could breach EU treaty obligations not to discriminate among citizens of the bloc.
Referring to four elements of Cameron's letter calling for EU reform that would allow him to campaign for staying in the Union, Tusk said: "The fourth basket on social benefits and the free movement of persons is the most delicate and will require a substantive political debate at our December meeting.
"While we see good prospects for agreeing on ways to fight abuses and possibly on some reforms related to the export of child benefits, there is presently no consensus on the request that people coming to Britain from the EU must live there and contribute for four years before they qualify for in-work benefits or social housing."
On the other three categories of reform, Tusk said that solutions were being worked on.
On British concerns that non-members of the euro zone could face problems due to coordination among those using the EU common currency, he said a "set of principles" to avoid "any kind of discrimination" might be found. Officials were also looking into a possible "mechanism" to support those principles without giving non-euro states "a veto right" over euro matters.
He said there was a very strong determination in the EU to promote the competitiveness, light regulation of business and free trade agreements that Cameron has called for.
And on British concerns about national sovereignty, Tusk said there was a "largely shared view" on ensuring national parliaments had an important role in the EU.
There was also "wide agreement", he said, that the concept of "ever closer union among the people", enshrined in the basic EU treaty and unpopular in Britain, allowed different states to integrate on "various paths".
Tusk, a conservative former prime minister of Poland, said he would act as an "honest broker" but urged leaders not to drag out the process of negotiation, which will start in earnest and in person at next week's summit in Brussels on Dec. 17 and 18.
"Our goal is to find solutions that will meet the expectations of the British prime minister, while cementing the foundations on which the EU is based," Tusk wrote.
"Uncertainty about the future of the UK in the European Union is a destabilizing factor. That is why we must find a way to answer the British concerns as quickly as possible."
Many European leaders have voiced a determination not to lose Britain, the EU's second biggest economy and, with France, its leading military power, at a time when the bloc faces threats from Russia and Islamist militants as well as difficulties with mass immigration and a struggling economy.
"We need to be united and strong," Tusk said. "This is in our common interest and in the interest of each and every EU member state. The UK has played a constructive and important role in the development of the European Union and I am sure that it will continue to do so in the future."
(Reporting by Alastair Macdonald; editing by Philip Blenkinsop)