Eleventh-hour negotiations have begun to create a much bigger financial “bazooka” to present at this week’s European Union summit that could include running two separate rescue funds and winning increased support for the International Monetary Fund.

This three-pronged rescue system would form part of a crafted package EU leaders hope will win over financial markets, just two months after a similar summit failed to convince bond investors Europe could contain its spiralling debt crisis. The rescue system would be introduced alongside proposals to rewrite EU treaties with far tougher budget rules for the eurozone. According to senior European officials, negotiators are considering allowing the eurozone’s existing €440bn bail-out fund to continue running when a new €500bn facility comes into force in mid-2012, almost doubling the firepower of the bloc’s financial rescue system.

The proposal, being debated by “sherpas” ahead of Thursday’s crucial eurozone summit, could also include speeding up cash payments into the new €500bn fund – known as the European Stability Mechanism – to give it more heft and improve its creditworthiness in the eyes of credit rating agencies.