The Cabinet has taken the key decision on possible British membership of the single currency.

Senior ministers gathered in Downing Street to consider whether Britain should replace sterling with the euro.

Ahead of the meeting, Number 10 rejected claims that the meeting would simply rubber stamp a decision that had already been taken.

"Today will be the day when the emerging consensus will move to become official government policy," said the prime minister's official spokesman.

The "lengthy process" in arriving at the decision was described as having been " very worthwhile" and something that the prime minister and chancellor valued.

"The seriousness with which the government is approaching the issue is reflected in the nature of that process," said the spokesman.

"The prime minister has devoted a considerable amount of time to this issue, given it is the most important decision any government can take."

A survey of City views, that revealed most financial chiefs believe the decision was purely a political one, was rejected.

Downing Street said that "clearly it is an economic decision that is being taken by politicians".

Cabinet discussions were also expected to focus on the UK's wider European policy, where key decisions on economic liberalisation and the adoption of a new constitution are high on the agenda.

Number 10 revealed there was no vote on the issue, saying that the Cabinet "clearly supports" joining the euro - but only if it is in the long-term economic interest of the UK.

Ministers had previously received the Treasury's assessment of whether the five economic tests for membership have been met and debated the final details of the statement that Gordon Brown will deliver in the Commons on June 9.

There has been speculation that all but one of the tests, on inward investment, have been failed.

But answering questions in the Commons on Thursday, trade secretary Patricia Hewitt hinted that she felt another test - on exchange rates - was moving closer to a pass mark.

Hewitt said she agreed that "the recent strengthening of the euro had significantly improved the fortunes" of manufacturers based in Britain.

Thought to be a leading single currency champion within the Cabinet, Hewitt said her own views on the subject "are well known" but urged MPs to wait for Brown's statement on Monday.