Blair, in weekend comments made at an international summit in the German city of Cologne, denied he had put joining the European single currency on the back burner but said it would be "daft" to go in straight away.

"I think Blair was saying that there is no case for rushing ahead and joining the euro now. The government's position...is exactly what it was," senior cabinet minister Jack Cunningham told BBC radio.

The government formula is that Britain will adopt the euro, sometime after 2001, if it is judged to be in the country's best interest and if the people back it in a referendum.

Cunmningham spelled out the economic tests set to judge whether joining the euro would be good for Britain, adding: "It's going to take some time to do that."

But The Sun, Britain's top-selling newspaperand leader of the anti-euro crusade, said it was clear Blair had backed down after Labour's disastrous showing in this month's European elections.

"It is obvious to us that Blair is moving on this issue and we applaud him for it," it said.

The right-wing Daily Telegraph said Blair had issued his most cautious assessment yet of Britain's prospects for early entry to the euro, and had thus begun "to swim with the current of public opposition to the single currency".