Ursula Von der Leyen has had her plans to send £43 billion (€50 billion) to Ukraine blocked by Hungary, despite handing over €10 billion in cash to ease tensions with the country.
This came just hours after an agreement was reached to start membership talks with the war torn nation.
Speaking after Thursday's talks in Brussels, Hungarian Prime Minister Viktor Orban said: "Summary of the nightshift: veto for the extra money to Ukraine".
The aid negotiations will resume next year, EU leaders said.
Ursula Von der Leyen has had her plans to send £43 billion (€50 billion) to Ukraine blocked by Hungary
PA
Commenting on Mr Orban's opposition to the aid, Dutch Prime Minister Mark Rutte said: "We still have some time, Ukraine is not out of money in the next few weeks."
He added: "We agreed with the 26 countries. Viktor Orban, Hungary, were not yet able to do that.
"I am fairly confident we can get a deal early next year. We are thinking of late January."
Orban has been in a battle with the EU in recent months, repeatedly blocking EU plans to continue providing financial support to Ukraine.
He also threatened to derail the EU's plan to grant Ukraine membership, saying Hungary would not take a decision on the nation's accession to the bloc until EU leaders held a "strategic discussion" on the issue.
Von der Leyen appears to be backed into a corner by Hungary, who are demanding around €30 billion in EU funding in exchange for the nation lifting its veto on support for Ukraine.
Brussels yesterday confirmed that it will release some €10 billion in EU funds, which were frozen over corruption and rule of law concerns.
But Orban's political director, Balázs Orbán, said they would only lift their veto if Brussels handed over all the money it had frozen - amounting to 30 billion.
In comments made ahead of the EU summit, Orban warned Von der Leyen that the bloc is "about to make a terrible mistake".
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Speaking about the union's plans to begin membership talks with Ukraine - and provide 50 billion euros in financial aid - Orban said: "The European Union is about to make a terrible mistake, and they must be stopped.
"This is a mistake; we are destroying the European Union."
The Hungarian Prime Minister reiterated his threat to oppose the plans.
The EU's ruling body agues it had no choice but to release the money to Hungary because it made the necessary reforms and now respects the rule of law.
One EU official told Politico: "A solution is possible. We will have to give [Viktor Orbán] something. That hurts, but that’s the way it goes.
They added: "We’re on a knife’s edge."
One EU official said that freezing funding "was actually much more effective than we had expected".
