MEPs have rejected the EU budget deal agreed by leaders last month.
The European Parliament said it wants more flexibility in the 960-billion-euro spending plan.
Lawmakers argue growth-oriented areas such as innovation, research and education should be a priority.
Parliament president Martin Schulz said: “The figures the Council adopted are the figures of 2005, 8 years ago, and they should be prolonged to 2020. It easy to understand that in 2020 nobody will fullfill the duties of the EU with the amount of 2005”
EU leaders agreed the first-ever real terms cut to the budget, but any deal must be backed the parliament.
While MEPs initially wanted higher spending, they are not challenging the overall headline figure.
Ireland, which holds the bloc’s rotating six-month presidency, will lead negotiations.
Dublin believes a deal will be done within months.
“Now we are at the time where we need decisions, so we have a decisions from the European Council, from February, today we have a decisions from the Parliament in terms of what the Parliament is looking for,” said Ireland’s Minister for European Affairs Lucinda Creighton. “Now we need to secure it. And I think we should do it by May.”
Our correspondent in Strasbourg Efi Koutsokosta said the European Commission will unveil a new draft within the coming weeks.
She said the first step will be to find a way to pay the EU’s outstanding bills for 2013 EU budget before MEPs will give their approval to the next seven-year spending cycle, that lasts until 2020.
The Brief from Brussels: EU officials back visa-free travel for Turkish citizens
The Brief from Brussels: EU releases new economic forecasts
EU executive cuts growth forecast for eurozone
UN urges restraint in Syrian conflict as peace talks stumble on
The Brief from Brussels: UN’s Ban chides Austria over asylum policy