BRUSSELS: The European Commission was set to unveil Wednesday detailed proposals for tougher financial supervision despite misgivings in Britain which is determined to defend the City of London.

The announcement, on the eve of a key meeting of the Group of 20 leading world economies in Pittsburgh, Pennsylvania, will include plans for new pan-European super watchdogs.

These new bodies, to oversee banks, insurers and securities firms, were agreed in principle at a European Union summit in June, so that Europe can join the United States in a drive to tighten financial sector supervision.

Once up and running they could impose mediation on national supervisors in the event of a disagreement.

Key to the proposals is the creation also of a European Systemic Risk Board (ESRB) responsible for identifying threats to the EU economy as a whole and with the power to demand national action.

The aim is to avoid a repeat of last year's financial crisis which saw over-leveraged banks go under or require massive state bailouts.

But it's that overarching power that has Britain and some other EU nations worried about the proposals, which must be backed by member states and the EU parliament if they are to come into force.

"The devil is in the detail," as one European source said.

Backing from Britain which jealously guards the success of the City of London, Europe's biggest financial centre is vital if the new structures are to be up and running as planned by the end of next year.

Under the commission proposals, the European banking authorities should have "the power to require national supervisory authorities to take specific action" to remedy emergency situations, according to a draft text.

The commission itself would have powers to decree an emergency situation.

London is concerned about ceding binding powers to EU institutions, where a supervisory authority could take decisions that leave British taxpayers picking up the tab.

"We think that it is important that responsibility for making those types of decisions rests with national supervisors," a British diplomat said.

Britain, which is not part of the 16-nation eurozone, in particular has qualms about plans for the European Systemic Risk Board, which the president of the European Central Bank, Jean-Claude Trichet, could end up chairing.

Diplomats said Britain could be persuaded if the governor of the Bank of England, Mervyn King, was made deputy of the new oversight body.

Britain thinks "there is a good case for putting forward the Bank of England governor as the vice chair," one EU diplomat said.

The Financial Times reported Wednesday that King was in fact the leading contender to become the deputy chairman of the board.

"There is an appreciation (in Brussels) of the fact that Britain is a large financial centre and its consideration might be above that of some other countries," it quoted an official familiar with the discussions as saying.

Britain has also obtained an undertaking that centrally decided measures "must not impinge on the fiscal responsibilities of (EU) member states."

The commission is therefore proposing a "safeguard clause" which would allow an EU nation to refuse to apply a decision which they opposed, after which a decision could be made by the EU nations in council.

Britain still wants this clause to be both clearer and broader.

It is not alone in having misgivings at the commission's plans, however the opposition from France, Germany and others goes in the opposite direction.

They want the safeguard clause to apply only to the risk of state intervention in the case of a failing bank, one European source said.

"If we don't clarify this point it will remain too ambiguous and be subject to manipulation," the source said.

Some nations, France in particular, fear that the scheme will give the commission too much power and slow the reaction time for dealing with crises.

"This text could give the commission too much power and has little chance of being approved as it is," another diplomatic source said.

While proposals to consolidate financial sector regulation in EU bodies have been around for years, governments only started taking them seriously after the crisis exposed the limits of overseeing big cross-border banks with national regulators.