The European Parliament has voted to reverse plans to cut the EU'S 2016 budget.
MEPs instead pledged an extra €4.4bn to help with "challenges" posed by the refugee crisis, unemployment and problems within the agri-food sector.
The move by the Parliament's influential budgets Committee follows the proposal in July by national governments to reduce next year's EU budget to €142.1bn, down from the European Commission's initial proposal of €143.5bn.
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The committee's decision to reverse the council's cuts proved unpopular with the Parliament's Eurosceptic MEPs. British deputies were particularly vocal, with UK Conservative budgets spokesman Richard Ashworth saying, "my colleagues in the European Parliament have not lived up to their commitment to responsible budgeting."
He went on to describe the committee's demands as "unrealistic and unreasonable" saying the Parliament "risks jeopardising funding that will be used to alleviate the migration crisis and are putting lives at risk."
Nigel Farage, chair of Parliament's Eurosceptic Europe of Freedom and Direct Democracy Group (EFDD) and a leading figure in the UK's Brexit campaign, also disapproved, tweeting that the "European Union wants another €519m of British taxpayers' money. The longer we stay in EU, the more it costs us."
Jonathan Arnott, an EFDD colleague of Farage on the budgets committee, said, "I am completely opposed to this budget increase. Sadly, the budgets committee of the European Parliament has shown itself once again to be completely out of touch with the British people."
The brewing institutional row over the EU's budget is likely to cause particular problems for UK Prime Minster David Cameron, as any increase will be seen as justifying Eurosceptic claims that the union is a drain on Britain's finances.
Robert Oxley, campaigns director for the anti-EU campaign group, Business for Britain, said, "the cost of the EU budget continues to spiral, just as ministers are asking us to tighten our belts at home. The fundamental problem is Britain does not have control over how the EU spends our money and next to nothing is done when it is found to be being wasted."
Pawel Swidlicki, a policy analyst for leading European think tank Open Europe, also criticised the move saying, "there is ample scope for the EU to increase its spending on the refugee crisis by reprioritising existing funds from within the EU budget which remains wasteful and inefficient."
Under the terms of the draft proposals, MEPs added €500 million for dairy farmers hit by falling prices, a commitment agreed by member states in an emergency meeting held earlier this month.
They also included €1.2bn to help EU agencies including Frontex, the EU border agency and Europol, the EU police agency, cope with the current refugee crisis.
A resolution on the committee's decision will be voted on in October's Strasbourg plenary session and is expected to pass with a majority.
The budget approved by MEPs is not final but a starting point for negotiations with EU member states.
Reflecting on this, Ashworth said, "it is really only a negotiating position, and I predict the UK Chancellor and his colleagues will be successful in severely pegging back the end result when we get into detailed talks involving national governments."