The crucial EU summit has ended with a row over which countries will get key new offices.

EU leaders meeting in Laeken, near Brussels did reach agreement over the counter-terrorist campaign, the Middle-East crisis and the shape of talks on Europe's long-term future.

In what is a minor row, the member states failed to agree which EU agencies would be based their cities.

Britain is expected to be the based for the European Police College which will be built in Bramshill, Hampshire.

Italian premier Silvio Berlusconi halted proceedings by complaining that the new European Food Safety Authority should go to Palma and not Helsinki in Finland.

Other member states also objected to the fact that France would get four of the EU agencies.

It was the final issue on a 58-point agenda of summit conclusions and despite a round of last minute negotiations they could not find a compromise.

Tony Blair urged for the issue to be shelved and Belgium, which is holding the presidency, agreed arguing the issue should not be allowed to overshadow the conference's other achievements.

Talks on the launch of a two-year debate on Europe's future, including reform of EU institutions, were declared a success, and there was a reaffirming of European unity in tackling terrorism.

On Friday EU leaders called on Palestinian leader Yassar Arafat to dismantle the terrorist networks of Hamas and Islamic Jihad.

In one of the first statements of the Laeken summit they also warned that Israel's decision to have no more dealings with him only undermines Middle East peace prospects.

Tony Blair also discussed plans for a security force in Afghanistan in a meeting with the France's Jacques Chirac and German's Gerhard Schroeder before holding wider discussions with the other 14 EU leaders.

The prime minister was joined by foreign secretary Jack Straw and the two men heard from other member states details what help they are prepared to offer.

The summit was seen as a crucial point in EU business as it could pave the way for significant political and structural change in the EU.

The prime minister arrived in Laeken, near Brussels, on Thursday night confident that the tide of euro-opinion is flowing Britain's way on key issues.

Blair was upbeat and claimed that Britain is winning the argument and believed the Laeken declaration will be a major stepping stone towards significant political and institutional reform.