Tony Blair has challenged the EU to deliver on "make or break" economic reforms.

In a speech to Brazilian businessmen in Sao Paulo on Monday night, the prime minister argued that "economic reform is now the agenda for European economic policy".

Although Blair has denied that progress on economic reform is a new sixth condition for British entry to the European single currency the speech has renewed speculation over government policy on the euro.

In a tough ultimatum to EU leaders ahead of a high profile economic summit set for next March in Barcelona, the PM described economic liberalisation, not next January's changeover to euro notes and coins in 12 member states, as "the real test of our collective European leadership".

Calling for progress in the liberalisation of energy, technology and air travel sectors, Blair extended his domestic "delivery" theme to the European stage.

"We already have a strong package of structural reforms, to modernise Europe, increase employment and promote growth. But we need to deliver it," he said.

British ministers were dismayed that last March's economic summit in Stockholm - overshadowed by the foot and mouth epidemic - saw France and Germany blocking liberalisation proposals in sectors defined as "key goals" by Blair.

Calling for increased "open trade" with regional blocs such as the Latin American Mercosul, in which his Brazilian hosts play a leading role, the prime minister focused on the issue of agriculture reform in a new global WTO round.

Again throwing down the reform gauntlet to other EU countries, Blair called for "major changes" to Europe's Common Agricultural Policy.

"The UK is a longstanding advocate of agricultural reform in Europe. We will continue to press for major change to the CAP - phasing out price support and putting European farming on a truly sustainable footing. But the launch of a new trade round in Doha this November would give a major boost to this process," he said.