By George Parker in Berlin

The Conservative leader’s meeting with Ms Merkel in Berlin is the latest stage in a charm offensive designed to rebuild a relationship badly damaged after he decided to pull the Tories out of the main centre-right grouping in the European parliament.

Mr Cameron has also invested in his relationship with Nicolas Sarkozy, the French president, who also opposes Mr Cameron’s decision to withdraw the Tories from the “federalist” European People’s party after next year’s European elections.

The Tory leader sees Ms Merkel and Mr Sarkozy as key centre-right allies; they recently unfroze contacts with him after accepting his 20-point opinion poll lead suggests he could soon become Britain’s prime minister.

Mr Cameron’s party has set up a series of working groups with Ms Merkel’s CDU conservatives, which produced reports on Tuesday on climate change, the economy and national security.

A similar exercise is under way with Mr Sarkozy’s UMP, while Mr Cameron’s team has also identified the governments of Sweden, Poland and the Czech Republic as allies. The Tory leader said the policy work with Ms Merkel’s party showed his party could continue to work closely as “good neighbours” with the EPP, rather than being “unhappy tenants” in the parliamentary grouping.

Mr Cameron said that while the Tories and Ms Merkel’s party agreed on many aspects of economic policy and the environment, he fundamentally opposes her enthusiasm for European integration and the EU’s Lisbon treaty.

“You have to be frank when you don’t agree – you can’t just paper over the cracks,” he said on a one-day visit to Berlin.

Ms Merkel’s allies say she remains suspicious of Mr Cameron’s intentions in Europe and fear that he could lead Britain into isolation, but she is said to admire his “green conservative” outlook and is intrigued by the way he has revived his party.

Tuesday’s meeting in the chancellor’s sparse modern office was cordial but tensions between Ms Merkel and Mr Cameron will be close to the surface if the Tories win the next election.

Mr Cameron repeated on Tuesday his plan to hold a referendum on the stalled Lisbon treaty if the text has not been ratified by Ireland, and other member states, by the time of a Conservative election victory. He would campaign for a No vote.

The Tory leader has also vowed to pull Britain out of the EU’s employment and social policy framework, a struggle that would require the unlikely unanimous support of all other member states to succeed.

Mr Cameron and Ms Merkel also take different lines on how best to deal with the threat of growing Russian aggression. The German leader is robust with Moscow but has resisted granting Georgia early Nato membership; Mr Cameron wants to speed up that process.

But the Tory leader has been calling for Europe to be more active in the foreign policy field and advocating a less “slavish” British attitude to the US. He told German journalists he opposed the term “war on terror” and opposed “grand schemes to remake the world”.

Copyright The Financial Times Limited 2008