Peter Mandelson, a long-time campaigner for the single currency, lavished the chancellor with praise yesterday.

Speaking minutes after Gordon Brown sat down, Mandelson said the chancellor had set in place a "credible" timetable for joining.

"On the basis of the chancellor's statement, we are substantially further forward than we were six years ago, and even two months ago," he said.

Writing in today's Independent, he adds: "So, let battle commence. It will be bloody and beastly. This is the last throw of the dice by the Thatcherite right.

"For the government, the integrity and future of the New Labour project is at stake. For Britain's sake, I hope ministers prove equal to the challenge."

Brown's comments were applauded by Chris Bryant, MP and chairman of the Labour Movement for Europe, who said that the government had realised that it would not win the argument "by being on the back foot".

Lord Marshall of Knightsbridge, the former chairman of British Airways who chairs the pro-euro group Britain in Europe, declared: "The euro game is clearly on. We are delighted the government has now started its campaign to explain how the euro would be good for business, for families, and for Britain.

"It is very significant that the chancellor also highlighted the costs to Britain of delaying entry, the missed opportunities for trade and investment."

Anti-euro campaigners, however, were also pleased with the chancellor's statement.

Labour MP Kate Hoey, a member of Labour Against the Euro, said: "The chancellor has made the right decision for the economy. Outside the euro we are able to keep unemployment down and public spending up. This is a decision the party can unite around."