Angela Merkel paid tribute to the UK's war dead and offered David Cameron a lifeline on EU reform during her visit to the UK yesterday.

In an unexpected move, the German Chancellor said that she agreed with the Conservative criticism of free movement of travel within Europe.

Her comments will be a relief to Mr Cameron, who is under pressure from his backbenchers to secure significant concessions from the EU ahead of a In/Out referendum in 2017.

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Earlier, in a highly anticipated speech she appeared to dampen Tory hopes by saying that those expecting her support for fundamental reform were "in for a disappointment".

In an astonishing moment she also surprised the hundreds of MPs and peers who packed the Royal Gallery of the House of Lords to hear her speak by saying that she bowed before the UK's war dead.

Her speech, in which she urged the UK to stay in the EU and argued that only co-operation could deliver prosperity, offered little or no sign of what was to come.

Almost immediately Eurosceptic Tory MPs complained her comments were "light on detail" of potential EU reform.

Downing Street also released a photograph of Mrs Merkel and the Prime Minister inside No 10 sitting awkwardly at opposite ends of a sofa, in a snap which appeared to underline the chasm between them.

But just a few hours later, following a lunch with Mr Cameron in Downing Street, where the red carpet had been laid out for her arrival, Mrs Merkel appeared to change her tune.

Answering questions at a joint press conference Mrs Merkel said she agreed with many of the Tory concerns about free movement of travel within the EU.

She said: "That is just as much of a headache for us in Germany as it is for the British people. We have to look at it."

While it would not be a "piece of cake" she said it should be possible to find "solutions".

Before she spoke Mr Cameron had stressed the potential difficulties that lay ahead.

"In a Europe of 28 countries, it is hardly surprising that the process of finding and reaching agreement requires time, patience and hard work," he said. "My objective is clear - I want to be able to say to the British people, in a referendum that will take place by the end of 2017, that we've sufficiently reformed the EU that they should vote to stay in it."

Katja Hall, CBI chief policy director, said: "Chancellor Merkel made a persuasive case that it is in our shared interests for the UK to stay in the EU.

"Both countries recognise Europe must reform to stay competitive and get the growth and jobs we need.

"That means the EU being more outward-looking and strengthening the Single Market, including safeguards for members outside the Eurozone. We need reform for the whole EU, with a Commission that better respects national boundaries, and for that to happen the Government must continue building partnerships in European capitals."