Mr Barroso said the reports were "absolutely false, completely false". The Portuguese government has made similar denials.

Speculation that Portugal would follow the Irish Republic in asking for help has been rising this week. Portugal approved its 2011 budget on November 26, which aims to cut its debts.

Prime Minister Jose Socrates said his country had "all the conditions" in place to finance itself on the markets, and that he expected the budget's approval to restore market confidence.

The budget seeks to cut the country's deficit from 7.3 percent of economic output this year to 4.6 percent in 2011.

Under the measures in the budget, public spending will be cut and VAT increased to a maximum rate of 23 percent.

Mr Socrates said the country had "no alternative at all" to cutting its budget. "We must make this effort," he said.