The prime minister still favours holding a referendum on the euro before the next election despite strong resistance from the Treasury, reports today's Telegraph.

Tony Blair is said to have told colleagues that he sees the single currency, along with disarming Saddam Hussein and reforming the public services, as defining issues of his premiership.

"I think it is still more likely than not [that a referendum will take place]," said one unnamed Cabinet minister. "But it's a close call, it all depends on how we come through the next six months."