David Cameron’s hopes of getting a reform deal on Friday look in doubt as haggling continues at the EU summit.
Several EU nations are digging their heels in over plans to curb migrant benefits and change EU regulations.
The prime minster had planned to return to the UK to fire the starting gun on an EU referendum campaign on Friday.
The BBC understands one of Mr Cameron’s closest cabinet allies Michael Gove will campaign for Britain to leave the EU when the referendum is called.
There has been increasing speculation in recent days that Mr Gove would argue for Out. He has, this week, discussed that with Boris Johnson, who is yet to make up his mind which side to back.
There has been no official confirmation from Mr Gove, the justice secretary, or from Number 10.
But BBC Political Editor Laura Kuenssberg said it seems the campaign to leave the EU had secured, in Mr Gove, a big Conservative cabinet name.
His decision will be seen as a coup for those campaigning for exit, and a blow for the prime minister, she added, because although not necessarily a well-known figure among the public he has for years been a close ally of Mr Cameron, and a well-respected, fellow Conservative moderniser.
Mr Cameron sounded cautiously optimistic about his prospects of a deal on Friday morning, saying there had been “some progress” in marathon all night talks, which broke up at 05:30 GMT.
But stumbling blocks still remain after a day of one-to-one meetings and there is speculation talks will continue into Saturday.
The original aim had been to conclude the deal at an “English breakfast” meeting on Friday, which became an “English brunch”, then an “English lunch” and has now been delayed to dinner, at 19:00 GMT.
Mr Cameron’s plan had been to head back to London, with a deal in his pocket, for an emergency cabinet meeting at which he would commit the government to campaign for Britain to stay in a reformed EU. That would trigger the start of the referendum campaign and allow ministers who want Britain to leave the EU to speak out.
But Mr Cameron has now said there will not be a cabinet meeting on Friday although he added “one will be held if and when a deal is done”.
Downing Street said the prime minister was “likely to have a number of further bilaterals including with the Danish PM, the Czech PM and the Dutch PM” before dinner.
A senior EU official said summit host Donald Tusk believed there was a “chance” of a deal over dinner but many issues remained to be resolved.
The BBC’s Europe Correspondent Chris Morris said there was confidence “in the background” that a deal can be done on Friday or Saturday. EU leaders did not want to leave Brussels without a deal and face having to return for another summit, he added.
There are signs that some of the stark differences expressed on Thursday, at the start of the two day summit, are starting to narrow.
Poland’s Europe minister Konrad Szymanski said a deal was “close”, telling reporters: “We managed to have a compromise on many, many issues… but we still need more clarification, more guarantees to get the compromise which would be satisfactory for both sides. There’s still some way to go, we need some hours.”
Poland is among four Central European countries resisting a British demand for an “emergency brake” on in-work benefits for migrant workers to be in place for as long as 13 years.
France and Austria both voiced concern that Mr Cameron’s demand for safeguards for non-eurozone countries, aimed at protecting the City of London from new financial regulations, might impede the development of the single currency.