Europe minister Peter Hain has begun "phase one" of the government's pro-euro campaign by arguing there is no alternative to the EU.

Issuing a point-by-point rebuttal of anti-European campaigners, he described people who back withdrawing from the EU as "fantasists simply deny history".

He said there was more to be gained from being in Europe than out.

His comments marked a stepping up of the government's efforts to convince a largely sceptical public of the benefits of the EU ahead of a possible referendum next year.

Ministers know they have a tough task - a poll commissioned by the Foreign Office found one-in-three voters is against EU membership.

Hain argued that it was wishful thinking to presume that the UK could prosper on its own.

"If we followed the anti-Europe fanatics and pulled out, they claim we'd be Norway with nukes; or Switzerland with Sainsburys," he said.

"I'm not going to pretend that if we hadn't joined, everything we take for granted today wouldn't exist."

"But we would be a diminished country. We would be poorer. Our weight in Washington and the world would be less. We would find it harder to project power and influence beyond our borders. We would be less safe."

In a direct attack on comments by former prime minister, Margaret Thatcher, Hain warned that the economy would be hit hardest if Britain left the EU.

"Being outside the EU's single market would be disastrous for the UK. The EU, with 370 million people, is the world's biggest market. It will be bigger still when the current applicants join - 500 million people from 2004 onwards," he said.

"Britain is a trading nation. We could not afford - literally - to be outside this market. We could not afford to have tariffs imposed on our goods and physical and legal barriers to our trade.

Sixty per cent of our trade is with the EU. We export four times as much to the EU as to the US. We export more to France than to the 50 other countries of the Commonwealth. And more to the Netherlands than to South East Asia. Eight of our top 10 export destinations are in the EU."The minister claimed not being a member of the EU would affect the everyday lives of the public.

"If we were outside the single market, you would no longer have the right to travel anywhere you wanted inside the EU. You would no longer have the automatic right to live in any of the other countries of the EU," he said.

"You wouldn't have the automatic right to work in those countries without a special permit. Your children wouldn't have the automatic right to study in them."

The issue was not a political issue or an academic debate but something that would have real consequences for the British people, Hain said.

"Being outside the EU would diminish our rights as British and European citizens," he said.

"Rights we all now take for granted. And let's remember that those rights aren't automatic. They come with EU membership. Not without it."