The nomination of arch-federalist Jean-Claude Juncker as the new president of the Brussels Commission is a "bad day for Europe", David Cameron has said.
The Prime Minister - who was defeated in his attempt to block Mr Juncker's candidacy - said his fellow EU leaders had made a "serious mistake" in allowing the European Parliament to choose the presidency.
"This is a bad day for Europe. It risks undermining the position of national governments, it risks undermining the power of national parliaments and it hands new power to the European Parliament," he said.
Mr Cameron had campaigned against the appointment of Mr Juncker, arguing he would block reform of the EU.
He also warned it could fuel Euroscepticism in the UK and make it more likely that Britons will vote to quit the EU in the referendum he is planning for 2017.
In forcing a vote on the nomination, Mr Cameron broke with tradition that the Commission chief is approved by consensus of the EU's national heads of government.
In the end, only Hungary joined Britain in voting against Mr Juncker's appointment, which was approved by a margin of 26-2.
The PM argued Mr Juncker was not the "right person" for the post His nomination, which must be confirmed by a vote in the European Parliament, was announced by European Council president Herman van Rompuy on Twitter.
He wrote: "Decision made. The European Council proposes Jean-Claude Juncker as the next President of the European Commission."
A delighted Mr Juncker tweeted: "I am proud and honoured to have received the support of the European Council."
At the end of the Brussels summit, Mr Cameron said that he had insisted on a vote as a matter of principle.
"If the European Council, the elected heads of government, are going to allow the European Parliament to choose the next president of the European Commission in this way I wanted it on the record that Britain opposed that," he said.
The Prime Minister said that while Europe had taken "one big step backwards" Britain had "made some small steps forward".
The Council had "broken new ground" in two areas during their discussions, he said.
This included an agreement that ever-closer union allows for different paths of integration and respects the wishes of countries such as Britain that do not want a closer relationship.
Former Luxembourg premier Mr Juncker was backed by Germany's Angela Merkel The leaders had also "agreed explicitly that they need to address Britain's concerns about the EU", he told a news conference.
"While Europe has taken one big step backwards today with their choice of Commission president, I have made some small steps forward, securing a new relationship for Britain in the EU," he said.
Labour's Shadow Foreign Secretary Douglas Alexander commented: "The outcome of today's summit represents an abject failure of leadership for David Cameron.
"Defeat for David Cameron was not inevitable. Yet is was predictable. Because for the past four years he's been burning bridges with our European allies when he should have been building alliances."
UKIP leader Nigel Farage said: "I think what's clear is that any cards that Mr Cameron may have had to play have been spent, and have been lost over a futile battle that he was bound to lose from the beginning.
"(Any) renegotiation now doesn't look very likely. He has been humiliated today but worse than that, he actually looks very isolated."
But Eurosceptic Conservative backbencher John Redwood did not view Mr Cameron's isolation in Brussels as a problem.
Writing on his blog, the former Cabinet minister said: "The battle over Mr Juncker was but the first skirmish in a long negotiation of a new relationship for the UK with the rest of the EU."
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