Tusk sent the proposals for a "new settlement" to European capitals, firing the starting gun for two weeks of frantic negotiations with the other 27 European Union leaders to secure a deal at a summit on February 18-19.
British Prime Minister David Cameron, who wants a deal so he can hold a referendum in June on his country's membership of the EU, said Tusk's proposal "shows real progress" but added that "more work" was needed.
The proposals will not take effect until Britain avoids a so-called "Brexit" and votes to stay in the EU in the referendum, the draft adds.
European Commission spokesman Margaritis Schinas said the proposals took into account all issues that Cameron raised in a letter to Brussels last year, and also took into account the concerns of other EU states.
More From This Section
The proposals include an "emergency brake" to stop EU migrants claiming benefits - such as income top-ups for low- paid workers - for up to four years after their arrival if a country can prove that its welfare system and public services are being overwhelmed.
It would then have to be voted for by a qualified majority of EU states.
But the question of how long Britain could apply this for is left blank in the draft circulated to EU leaders, where the issue will be one of the most contentious points.
The plan has angered the so-called Visegrad Four -- the central European states of Poland, the Czech Republic, Hungary and Slovakia - which have thousands of citizens working in Britain.
Cameron will hold talks in Poland on Friday with Polish leaders aiming to win them over to the changes. He is also set to hold talks with German Chancellor Angela Merkel in Hamburg on February 12.