The prime minister has told cabinet colleagues that, despite the Taliban's collapse in recent days, the war in Afghanistan is not yet over.

The full cabinet meeting on Thursday morning had been preceded by discussions on a rapidly-changing situation in the war cabinet, and talks between Tony Blair and European Commission president Romano Prodi earlier in the morning.

The PM told the cabinet that they should not be "under any illusion" that the military campaign was over and pointed to "pockets of resistance" in southern Afghanistan.

The prime minister's official spokesman said: "Clearly the prime minister welcomed the release of the aid workers and he also said the Taliban were in a state of collapse. But he said nobody should be under any illusion that this campaign is over."

The cabinet also heard from foreign secretary Jack Straw on diplomatic efforts to form a new "broad based" government and the possible deployment of Western peacekeepers. Defence secretary Geoff Hoon told the cabinet that while the situation in the south was still "very fluid", there was evidence of popular revolt against the Taliban in the region.

Ahead of the cabinet meeting, European Commission chief Romano Prodi met with Tony Blair in Downing Street.

The two men discussed the unfolding situation in Afghanistan and the pan-European response to events since September 11. The role of the EU in future military, political and humanitarian progress will also be on the agenda following calls from Prodi for a more unified European response to international events.

Blair expressed his gratitude to Prodi for the commission's hep in pushing forward European anti-terror initiatives and for the efforts it is set to make to rebuild Afghanistan.

The talks came amid concerns among some smaller EU member states that they have been sidelined from the decision-making process since the military campaign began and commission president has been personally furious not to be invited to a series of "mini-summits" involving the UK, Germany and France.

But while Prodi has said the EU must speak with a single voice, he also acknowledged that foreign and defence policy was not within the Brussels remit. It is a national decision for each state to decide their own role in the military campaign, he said.

Speaking ahead of his meeting with the British PM, who has taken the leading European role since September 11, the commission chief also told the BBC that expanding the EU's foreign affairs and defence role would be the final development in building an integrated Europe. "Without this goal we are powerless in the big united and global war," he said.

Prodi cited the decision to press ahead with a new round of world trade talks as an example of what could be achieved when EU members worked together, rather than as individual states, but added that the union had responded effectively to the current crisis.

"We spoke with one voice and are taking collectively very big decisions for the arrest, for the money laundering in all the chapters where we need new cooperation against terrorists," he said.