LONDON — Iceland and Britain backed away from a full-blown diplomatic war yesterday over the decision by the Icelandic president to veto a bill on the repayment of a $5.7 billion loan.

A day after Britain warned that Iceland risked becoming an international pariah, Icelandic Foreign Minister Ossur Skarphedinsson said he had received assurances from his British counterpart David Miliband that Britain would not block Iceland's entry to the European Union in retaliation.

Moving into wider international damage control, the embattled Icelandic government also dispatched Finance Minister Steingrimur Sigfusson to two fellow Nordic countries in a bid to persuade them not to pull the plug on a much-needed bailout package.

President Olafur R. Grimsson, meanwhile, stressed that Reykjavik would still honour its commitments. Grimsson caused the crisis by refusing to sign into law legislation to repay Britain and the Netherlands money they used to compensate their citizens who had invested in Icesave, a collapsed Icelandic Internet bank.

Grimsson's decision — only the second time in Iceland's history that a president has vetoed a bill passed by Parliament — triggered a national referendum on the issue, tentatively scheduled for February 20.

While the referendum refers to the terms of the loan repackage and not the commitment to repay the funds, the likelihood of a "no" vote in that poll raised hackles in Britain, which already is struggling under its own debt burden from the global credit crisis.

Fuelling the worst political standoff between the two countries since the Cod Wars of the 1970s over fishing rights in the North Atlantic, British Financial Services Minister Paul Myners on Wednesday cast doubt on Britain's support for Iceland's EU bid.

Both Britain and The Netherlands have the ability to veto Iceland's entry to the European body, a step that most analysts see as essential in the tiny island nation's economic recovery.

Skarphedinsson said that his discussion with Miliband was affected the "difficult dispute" they are engaged in, but added that the British foreign minister had pledged his support for Iceland's EU bid.

"Mr. Miliband stated quite strongly that the situation . . . would have no detrimental impact with the British trying to do anything to influence that," Skarphedinsson told The Associated Press by telephone from Reykjavik. "He stated explicitly that Iceland had its support for the EU."

Skarphedinsson said he had received no direct assurances from the Dutch, who have not publicly raised the issue.

Britain's Foreign Office said in a statement that it "fully supports Iceland's application for EU membership." It added it was disappointed with Grimsson's decision and was consulting with Iceland on "how this problem can be resolved".