David Cameron has seemingly done the impossible in Brussels - he has found a 'pathway to a deal'

Britain's Prime Minister David Cameron has seemingly done the impossible - he has managed to get "a pathway to a deal."

Cameron announced early today that "good progress" was being made at the EU summit in Brussels where he is renegotiating the terms of Britain's membership within the 28 nation bloc.

He said "nothing is certain in life or in Brussels but there is a pathway to a deal in February. But the truth is it will be very hard work."

Meanwhile, German Chancellor Angela Merkel said leaders "all want a compromise."

Cameron promised Britons that his government would push for a "better deal" with the EU, which includes renegotiating immigration rules for people coming to the UK as well as banning immigrants from claiming benefits for four years, ahead of the 2017 referendum.

No deal had been agreed but there was no expectation that a deal would be completed so quickly.

However, what he said in his speech today is a huge deal.

For months, EU leaders seemed immovable when it comes to Cameron's desire to restrict the free movement of EU citizens. Here is a paragraph in a letter he sent to European Council President Donald Tusk last month that outlined the changes he would like to make to Britain's relationship with the EU.

But we need to go further to reduce the numbers coming here. As I have said previously, we can reduce the flow of people coming from within the EU by reducing the draw that our welfare system can exert across Europe. So we have proposed that people coming to Britain from the EU must live here and contribute for four years before they qualify for in-work benefits or social housing. And that we should end the practice of sending child benefit overseas.

Philippe Gudin, an economist at Barclays, wrote in a note this week that the the welfare exemption for migrants is "a red line for many countries."

"Of course the question of a change to the EU Treaty will have to be considered, and probably rejected, at least for now, by many member states. We should not expect any conclusion today, but the tone of the discussions will probably indicate the extent to which an agreement acceptable by both the UK and the rest of the EU will be possible before February," he added.

But today, Cameron revealed that progress is being made in talks and yet he hasn't compromised on the migrant welfare demand.

"In terms of welfare, no, I haven't put any other proposals on the table - I have put my four-year proposal on the table and it remains on the table," he said today in his speech.

France and Germany are the biggest critics over Cameron's demands over immigration quotas and welfare bans.

However, German Chancellor Angela Merkel said "I am optimistic because we all want a compromise. But work on substance needs to be done. Treaty change might be possible. Not now, but perhaps later." Meanwhile, French President Francois Hollande said there could be adjustments over Cameron's demands.