A former Number 10 adviser has predicted that there will still be a euro referendum this year despite the war in Iraq.

In an interview with ePolitix.com Jon Cruddas, a deputy political secretary to Tony Blair during Labour's first term in government, said the war in Iraq could even convince the prime minister to go for a poll on the single currency.

"Rather than the war derailing the referendum, I think it will reinforce the pressures to have one," he said.

"The experience of the war will demonstrate to the prime minister that he can shift public opinion on big international issues. It has allowed a 'New' Europe to emerge and there will be a belief that early entry will allow space to rebuild relations within Europe in the post war period."

Cruddas, who advised the prime minister on trade union issues before being elected Labour MP for Dagenham, predicted that a poll on the single currency will come before the end of the year.

"I still think that we will have a referendum this year. The centrifugal political pressures for us to join and the belief among key members of the government that there are issues of destiny and inevitability about it means the likelihood - irrespective of the economic context - is that there will be a referendum this year. And I think the government can win it."

Cruddas, who is opposed to joining the euro, said the public's opposition was not as strong as opinion polls and the media suggest.

"Even though public scepticism might be acknowledged, it's a weak scepticism that will be submissive to the type of argument and the juggernaut that the pro campaign will develop," he said.

He argued it was better for the prime minister to lose the referendum - which would give him better leverage to get the reforms in Europe that the government believes are vital.

"If the prime minister calls a referendum and he loses, because I am sceptical, I think it would help him more than if he wins it. If he loses it will help his domestic strategy of delivering on the agenda he was elected on," said Cruddas.

"I think he can portray it to his colleagues in Europe as establishing his credentials by calling the referendum in the face of singularly hostile opinion polls and having only just lost it.

"That's quite a big journey he's taken the country on. Not completed but it will be seen as a key staging post which shifted opinion towards it."

Staying outside the eurozone, Cruddas argued, is Britain's key negotiating tool for getting change.

"Our ability to influence and shape reform is actually increased by being outside the euro given the strength of the economy and the political traction that we have because of this," he said.

"I see influence as being primarily determined by economic strength and not the formal membership of committees. We can propel forward the reform agenda by being outside which we loose if we go in too soon without the necessary reforms in place."

He rejected the idea that losing a euro poll would fatally damage the government.

"I don't think actually it should be seen as having any seismic effect in terms of the Labour government because it isn't a general election issue. People care about health, education, anti-social behaviour, transport and the fight against crime when they vote at elections," he said.

Cruddas was also highly critical of the way the euro debate is portrayed by both sides of the argument, including in the media.

"It's a terrible indictment of where we really are. The most profoundly important issue in front us - whether to join the euro - is dominated by caricature," he said.

"On the one hand, those who are in favour of an early entry are perceived to be selling out our heritage, sovereignty and history. Those who aren't in favour are seen as little Englanders whose actions border on xenophobic," he said.