Tony Blair has said Britain can continue to play a leading role in Europe without joining the single currency.

"I am convinced that Britain could be a key partner - if you like, a partner leader in Europe - on fundamental sectors like defence, economic reform, environmental protection and so on. But entering the eurozone is another question," he told Italian newspaper La Repubblica.

Meanwhile, the decision to call a referendum on British entry into the euro would be "political", Downing Street acknowledged yesterday.

The prime minister's official spokesman accused the media of playing a game of "hokey kokey" on whether Britain would be in or out of the euro, but added that the government's policy had not changed. He said: "Self-evidently, any decision to call a referendum would be a political decision, in as much as it would be made by politicians."