France and Britain are seeking to establish a mechanism to better coordinate their strategies at a European level and avoid a repetition of December's clash over a European fiscal pact, President Nicolas Sarkozy said on Friday.

Speaking after an annual Franco-British summit, which agreed deeper cooperation on civil nuclear technology and development of military drones, Sarkozy said the idea for the NATO and EU allies was to better comprehend each other's red lines at a European level.

I am convinced that Europe needs Great Britain, Sarkozy told a news conference, flanked by the British leader.

We are putting working methods in place with David Cameron which will allow us to narrow our differences and understand each other's red lines: the single market for our British friends and quicker decision making in the euro zone for the French.

Cameron infuriated other European Union members in December and sparked speculation about Britain's place in the bloc by vetoing an EU treaty change and forcing euro zone countries to negotiate a fiscal accord outside the Union.

The Czech Republic eventually joined Britain in saying it could not join the deal. The treaty calls on signatories to introduce a balanced budget rule into national legislation to avoid a re-run of the single currency bloc's debt crisis.

Britain, which joined the EU in 1973, had sought safeguards around the single market for its large financial sector at December's summit, but had not received them. Cameron's stance infuriated France which accused Britain of isolating itself.

We are working towards a way of organising things that will permit Britain and France -- no doubt in agreement with our German friends ... and perhaps our Italian ones -- to better take into account each other's problems so that we can look to the future with our specificities but moving in the same direction, he said.

Neither Sarkozy nor Cameron provided further details of how this might work.

(Reporting By John Irish and Daniel Flynn; editing by Catherine Bremer)