By Georgie Keate
The coalition has launched a thorough review of the EU's powers over Britain, amid ongoing pressure from Conservative eurosceptic backbenchers for a referendum.
Tory MPs repeated their calls for the review to look at the scope for a referendum on Britain's ongoing membership of the EU after William Hague unveiled the government's plans.
The foreign secretary insisted the audit "not a consultation about disengaging or withdrawing from the EU" and that government policy had not changed, however.
Ministers have resisted demands for a public vote from nearly 100 Tory backbenchers, who last month signed a letter to the prime minister calling on him to legislate for a referendum in the next parliament.
Today Hague reassured MPs in his statement that Britain will not join eurozone countries in closer fiscal integration but keep its flexible membership instead.
The audit had been brought forward after a Sunday Telegraph article by David Cameron argued it was not in "Britain's best interests" to have an in/out referendum on EU membership.
"As the EU continues to develop we need to be absolutely clear when it is most appropriate to take decisions at the national or local level, closer to the people affected, and in other cases when it is best to take action at the EU or global level," Hague said.
In his article, Cameron was adamant that Britain's membership in the EU single market was vital to its survival but vowed to "scrap" layers of bureaucracy that affect social issues and home affairs.
He warned that it would be impossible to predict what might happen to the eurozone but insisted in the meantime that the institution remains "modern, effective, efficient and legitimate".
Hague's audit will document what the EU does and how it affects the UK, focussing in particular on whether it is in Britain's national interest.
Charles Kennedy, former Lib Dem leader, warned that "holding the EU to ransom" would not work.
"We will be left without a UK seat at the table, unable to stand up for the UK's interests when neighbouring countries make separate agreements on growth and financial services, and powerless over serious cross-border issues like pollution, climate change or organised crime," he said.
"That is not standing up for Britain."
The review will be carried out by every department that is affected by EU policy and collected by the Foreign and Commonwealth Office and Cabinet Office.
"We will be equally interested to hear from car manufacturers about EU product standards, as from NGOs about EU environmental policies, or security experts about combating organised crime," Hague went on.
The review will begin its work in the autumn and is due to be completed by 2014.