George Osborne has been accused of resorting to "smoke and mirrors" after he claimed to have halved the ­additional bill Britain will pay towards the European Union (EU) budget from £1.7 billion to £850 million.

The Chancellor said a deal reached at a summit with fellow EU finance ministers in Brussels yesterday amounted to a result for Britain that was "far beyond what anyone expected us to achieve".

Shadow Chancellor Ed Balls accused Mr Osborne and Prime Minister David Cameron of "trying to take the British people for fools".

He added: "Not a single penny has been saved for the taxpayer compared to two weeks ago when David Cameron was blustering in Brussels."

Downing Street insisted there had been no guarantee that the UK's regular rebate would be applied to the extra surcharge, demanded after a recalculation of Britain's gross national income relative to the other 27 member-states, and that the Chancellor had succeeded in having it applied at a rate of half the total demand, rather than the usual one-third.

Mr Osborne said Britain would pay the £850m in two instalments in the second half of 2015 and would pay no interest on the delayed payment, which had initially been due next month.

"Instead of footing the bill, we have halved the bill, we have delayed the bill, we will pay no interest on the bill. And if there are mistakes in the bill, we will get our money back," said the Chancellor

"We have also changed permanently the rules of the European Union so this never happens again. This is far beyond what anyone expected us to achieve, and it's a result for Britain."

But Irish finance minister Michael Noonan said he did not know the basis on which Mr Osborne made his calculation, adding: "The instalments will be paid over a period of time. My understanding is that the UK will pay the whole amount, but there will be no penalties attached."

Jeroen Dijsselbloem of the Netherlands said: "The UK has ... a rebate, which they have had for a very long time and of course this mechanism of rebate will also apply on the new contribution. So it's not as if the British have been given a discount."

Austria's Hans Joerg Schelling said: "Whether the money is to be paid in instalments or as a lump sum is a discussion we can have. But the amount cannot be put in question."

The European Commission's vice-president with responsibility for the budget, Kristalina Georgieva, said the additional contribution being demanded from the UK meant its rebate was also increased, leading to a "downward correction" in the sum owed.

The rebate of around €1bn would normally be payable in the spring of 2016, but in these exceptional circumstances it will converge with the payment.

She said: "The adjustments for the UK mean that the UK has to pay more, but also that, as a result of this increase, the UK rebate will go up. Given that payments no more are due for exceptional large sums on December 1, but they would be spaced over a longer period of time, then the payment and the rebate would match in time." She said that in factual terms, the Chancellor was accurate with his remarks.