Foreign Secretary William Hague is launching a “comprehensive audit” of UE law and its impact on the UK, including laws that affect business and other possible overlaps with British law.

Concluding in 2014, the audit will be a unique exercise and a point of reference for other European countries and how EU law impacts on their national life.

Of particular interest to UK business will be a review of the operation of the EU’s working time directive, which is deeply unpopular with many employers and was specifically mentioned as an area to be reviewed in the coalition agreement.

However, Mr Hague denies that the audit will form part of the building blocks of an argument for withdrawal from the EU altogether, despite huge support for this from many of his Conservative colleagues, including the Fresh Start Group of Tory MPs who want the UK to opt out.

The Liberal Democrats on the other hand are more wary of the audit and Lib Dem leader Nick Clegg in particular is keen that it does not sour relations with other EU member states.

Mr Hague explained that Government departments will be tasked with “consulting and inviting evidence from everyone with a knowledge of, and interest in, the exercise of the EU’s competences, including, of course, committees of Parliament and the devolved administrations, but also businesses, civil society, other interested parties and individuals with expertise in and experience of each area.”

He added: “Such a comprehensive piece of work has never been undertaken but is long overdue. It will ensure that our national debate is grounded in knowledge of the facts and will be a valuable aid for policy-makers in the future.”