"The British public want this addressed. We are going to do this in a calm, rational way,” George Osborne, Britain's Chancellor and a close Cameron ally, said after German media reported Chancellor Angela Merkel was uneasy about the idea.

Under growing pressure from the anti-EU UK Independence Party (UKIP) ahead of a May 2015 national election and from some of his own MPs, Cameron has said he'd like to try to curb EU immigration if re-elected.

He hasn't explained how, and any changes would be contingent upon him winning the next election with an outright majority and making good on a promise to renegotiate Britain's EU ties before holding an EU membership referendum in 2017.

His rhetoric has, however, already drawn criticism from the European Commission which says any such limits would infringe EU rules on free movement of workers.

Merkel, a vital ally for Cameron if he is to wring change from the EU, has long made clear she too believes the EU's freedom of movement regime is sacrosanct.

But on Sunday German magazine Der Spiegel reported Merkel had hardened her stance on the issue and was ready to abandon her attempts to keep Britain inside the EU if it tried to curb immigration from other EU states.

"I think it’s a little bit thin," Osborne said of the Der Spiegel report, saying his own contacts with the German government had shown Berlin understood British public disquiet about EU migration.

A spokeswoman for Cameron dismissed the same report as "speculation", saying Merkel's position was "not new".

"What matters is that in any negotiation you've got to be clear what's important to you, and the PM has been clear that he's determined to fix this," the spokeswoman said.

"The objective is to address the concerns that British people have about migration from the EU."

Cameron has said he'll set out new ideas about how to tackle the issue before the end of the year.

EU EXIT?

Osborne said concerns about immigration were running high in Britain, where the issue has overtaken the economy as voters' top concern in some polls.

"It was never envisaged that you would have such large numbers of people coming, who don’t have job offers, people who move on to our benefit system," Osborne told BBC TV. "And that causes a lot of public unhappiness."

UKIP, which wants Britain to leave the EU and to curb immigration, has tapped into those concerns, particularly about recent migration from Romania and Bulgaria. It has linked the issue to Britain's EU membership, arguing it will never have control of its own borders while it remains inside the bloc and subject to EU rules on the freedom of movement of workers.

Nigel Farage, UKIP's leader, said Cameron would not be able to negotiate any meaningful changes in the way the EU works, while some of Cameron's own MPs said the Spiegel article appeared to be an early German negotiating ploy.

A spokesman for Merkel said Germany wanted Britain to remain an "active and engaged" member of the EU but that the general principle of freedom of movement was not negotiable, a sentiment echoed by new European Commission President Jean-Claude Juncker.

Speaking in Frankfurt, Juncker said it was one of the EU's core freedoms and one that mostly benefited those countries where migrants from eastern Europe had come to work.

"We are not, here in 2014, going to start questioning one of these core freedoms," Juncker said at a book presentation by former German Chancellor Helmut Kohl.

Cameron has made it clear he wants to find a way of respecting the EU rules when it regards work, while clamping down on what he has called "freedom to claim benefits."

Germany has expressed some sympathy with such a position and Merkel's spokesman said there was interest in cooperating with Britain to tackle any abuse of freedom of movement.

The opposition Labour party, which doesn't favour holding an EU membership referendum for now, said Cameron's strategy was imperilling Britain's membership of the bloc.

"These comments by a German Government spokesperson reveal that David Cameron is both losing influence and losing allies in Europe," said Douglas Alexander, Labour's foreign affairs spokesman