A senior minister has sparked a new row after giving a clear sign that the government believes Britain will join the single currency.

Peter Hain, the Europe minister, told the magazine "Tribune" that Britain was "marching" towards inevitable membership of the euro.

Going beyond the government's agreed line on the single currency, he said: "The euro is marching on and no one thinks the decision can be postponed for ever, apart from the right of the Tory party. I have always thought that the euro is a logical development of a single market and there is a need for it, in order to introduce price transparency and the harmonisation of costs."

Hain, a one time euro-sceptic, said the introduction of euro notes and coins at the begining of next year would swing public opinion behind the new currency.

"Next year is going to be very important as people will have new notes and coins in their wallets when they go abroad. Companies trading with Europe will start to deal in euros," he told Tribune. "Some are already considering paying their British staff in euros, while shops are talking about displaying prices in euros."

A spokesman for the Foreign Office denied that Hain's comments represented a shift in the government's position on the single currency.

"There is no change to our policy, which is that the assessment of the five tests will be completed within two years of the general election, as the prime minister made clear to the House on 7 February."

Hain, however, signalled that the government will try and sell the economic benefits of euro membership to voters.

He said: "If we were to call a referendum, the only way a majority would vote 'yes' is if they thought the decision was being made in the interests of jobs and their future prosperity, not because of some kind of ideological pro-European dogma."

The minister also warned Labour that it could not rise above the arguments for ever. "We will not win the European argument unless we engage party members and trade unionists and you can't do that by staying aloof," he said.