The German chancellor will ask Britain to stand aside as she promotes an ambitious blueprint to integrate continental Europe’s armed forces.
It comes as Jean-Claude Juncker, president of the European Commission, said Britain will get a deal if it gives the green light to a raft of powerful new EU institutions..
A Berlin source said agreeing not to “block” Mrs Merkel's defence plans is a “favour” that she would seek from Mr Cameron as he looks for her support in the renegotiation.
“If you want favours, you have to give favours,” the source said.
"If Cameron wants a 'flexible Europe', he must let other members integrate further. Yes - opt out, opt out, opt out - and then shut up.”
While there is no expectation or obligation for Britain to take part in steeper integration, the creation of an EU army could marginalise Britain within Nato and result in the United States downgrading the special relationship with Britain in favour of Paris and Berlin, experts warn.
While Mr Cameron backs tighter Eurozone integration, he faces a dilemma over whether the risk of a diminished strategic position is a price worth paying in his renegotiation.