David Cameron has insisted he still hopes to complete his EU membership renegotiation next month after his Hungarian counterpart said he was "sure" British concerns about benefits abuses could be accommodated.
At a joint press conference after talks in Budapest, Viktor Orban sharply denied that Hungarians were "parasites" on the UK taxpayer.
But he said he recognised anxiety over "abuse" of Britain's welfare system, and expressed confidence that the V4 - Hungary, the Czech Republic, Poland and Slovakia - would agree to a solution.
The comments will have encouraged the Prime Minister at the end of another gruelling diplomatic offensive which saw him meet Angela Merkel in Bavaria on Wednesday evening before heading for Budapest.
Mr Cameron admitted there was now "limited time" before next month's summit of EU leaders, which he had previously earmarked for securing a deal, and stressed that the in-out referendum did not have to take place until the end of 2017.
However, he said he remained hopeful a package could be finalised in time for the Brussels gathering on February 18 - which would mean the national ballot could take place in June.
"I think we have made good progress right across the EU on all these issues," Mr Cameron said.
"I am confident we can reach agreement because there is a bigger picture here as well, which is the importance of Britain remaining in a reformed EU, but also for Europe ...
"We bring a lot to the EU as well as benefiting from the EU."
Mr Cameron said his proposal of a four-year ban on migrants claiming in-work benefits - viewed as the most difficult part of the reform package - was still "on the table" although he reiterated that he was ready to listen to alternatives.
Speaking through an interpreter, Mr Orban avoided addressing the specific proposal and said he would not accept any "discriminatory" measures.
But he added: "I think we will be able to agree ... "I am sure we are going to be able to find a solution that is going to be suitable for the Hungarian employees."
He said: "The abuses that are seen in social benefits systems have to be eliminated. I made clear that the Hungarian government does not support any abuses at all."
Mr Orban condemned the description of Hungarians in the UK as "migrants", saying the estimated 55,000 working in the country were contributing more in taxes than they took in benefits.
"We would like to make it quite clear that we are not migrants to the UK," he said.
"We are members of a state in the EU that can take jobs anywhere in the EU."
He added: "We do not want to be parasites, we want to work there."
In an interview with German broadcaster ARD, Mr Cameron argued that his proposed four-year benefits ban would not be discriminatory or against EU law.
"The European law has developed through the way that courts have interpreted it. If you go back in history, originally free movement of workers meant that it was the freedom to go and take a job and hold that job in another country," Mr Cameron said.
"60% of the people coming to Britain from the European Union now are job seekers. They're coming because we're creating lots of jobs. We're a very successful economy. But 60% don't have a job when they arrive; they're job seekers.
"So, the law has changed and we should be flexible in Europe. We should try and deal with the problems as they emerge."
Stressing that he did not want to undermine the principle of freedom of movement, Mr Cameron went on: "We're a country that has welcomed migrants, not just from Europe, but from all over the world.
"We don't want to change that, but we do need to address this excessive pressure that we've got at the moment, partly because our in-work welfare system's so generous and you get instant access to it ...
"It's because Britain's got this non-contributory system that the problem arises. So I don't call what I'm proposing discrimination."