Hungary has blocked €50 billion worth of EU aid for Ukraine.
The move comes just hours after EU leaders voted to start negotiations for Ukraine to join the bloc.
Hungarian Prime Minister Viktor Orban had opposed starting the talks but agreed to step out of the room to allow the other 26 leaders make a consensus decision without him.
In a video on social media, he labelled the decision “completely senseless, irrational and wrong” and said his EU counterparts had insisted on making the agreement without him.
He then put up strong opposition to the proposed €50 billion aid package – eventually blocking the move entirely.
In a post on Twitter, Orban said leaders would come back to the issue at the next European Council meeting after “proper preparation”.
Hungary is Russia’s closest ally within the EU and the move is a blow to Ukraine amid concerns the strength of support from its western allies is waning.
Ukraine's President Volodymyr Zelensky described the decision to open negotiations on EU membership, "a victory that motivates, inspires, and strengthens".
EU leaders also agreed to start talks with Moldova.
Moldovan president Maia Sandu said her country had turned "a new page today with the EU's go-ahead for accession talks” adding that Moldova was, “ready to rise to the challenge".
The leaders also granted Georgia ‘candidate’ status at yesterday’s meeting.
The conflict in Gaza is expected to feature heavily during leaders' discussions today as the second day of the summit gets underway.
Taoiseach Leo Varadkar yesterday urged his colleagues to take a firmer stance on the war and call for an end to the fighting between Israel and Hamas.
He warned that the EU had lost credibility around the world over its failure to take a stronger position on Israel’s bombing of Gaza.