Prime Minister David Cameron insists that agreement on a long-term budget for the European Union is "achievable", but said he was prepared to "hang very tough" and wait rather than accept a deal which is not good for Britain.
Talks on the EU's seven-year budget for 2014-20 - known in Brussels jargon as the multi-annual financial framework, or Maff - collapsed last month after leaders accepted they were nowhere near a deal.
But Mr Cameron said the talks helped establish a "pretty strong and pretty stable" alliance between the UK and other net contributors to EU coffers, including Germany, Sweden and the Netherlands, which should together be able to deliver a budget which is billions of euro smaller than was proposed by the European Commission.
Speaking at a Westminster lunch, Mr Cameron again insisted he wants Britain to remain in the EU, and confirmed he intends to renegotiate the UK's relations with Brussels before seeking "fresh consent" from voters.
Dr Fox used a speech to the Royal International Services Institute and Open Europe to call for the Tories to launch a new policy within a year of offering voters the choice in a referendum after the general election between a stripped-back single market relationship with Europe or withdrawal.
"I'm not remotely going to confront anybody, because there are traditions in every political party of having members who want to leave the EU," said the PM.
"That's not my view and not the party's view, but this is a broad church and you will always have people who take that view.
"I think the settled will of the Conservative Party is absolutely in tune with the settled view of the country, which is that we know in our heads that we need to be part of this organisation because we are a trading nation, but we know in our hearts we would like the relationship to work better."
Mr Cameron said he would "soon" be making a speech to set out his intentions in relation to the EU. And in a risque reference to his delay in making the long-awaited address, he joked: "It's a tantric approach to policy-making - it will be so much better when it does eventually come."