Tony Blair has dismissed Tory criticisms on Europe, warning that "the lunatics have finally taken over the asylum" under Iain Duncan Smith.

The prime minister attacked Conservative policies which he said could threaten Britain's place in the European Union in his weekly grilling by MPs on Wednesday.

Blair also rejected suggestions that he had now adopted the same "wait and see" policy on the euro for which he had previously criticised John Major's administration.

Turning to calls for a referendum on the planned European constitution, Blair also accused the party of secretly wanting to withdraw from the EU.

He said the Conservatives "want to paralyse the European Union as the first step to getting this country out of Europe".

"That is the true argument, that is the argument we are going to join in with relish on this side of the house," Blair told the Commons.

"Because it is not patriotic, it is not the British national interest. It is a betrayal of the British national interest."

But throwing the prime minister's own word's about the last Tory administration back at him, Duncan Smith said the government was "weak and divided" on Europe and the single currency.

But the prime minister said he was "absolutely amazed" that Duncan Smith would raise the problems of the last Conservative government.

"Who was the person creating all the trouble?" he asked.

But the Conservative leader, a former Maastricht rebel, reminded MPs that only the prime minister had stood on a manifesto pledging to leave the EU.

And he said the government's policy would lead to a damaging running commentary on whether Britain will join the euro.

"He has now no clarity, no unity and no credibility at all," Duncan Smith said.

Blair replied that the government knew the obstacles to membership and had policies to remove them.

He said it would be a "disaster" to withdraw from the EU.

The prime minister added that the Tories would rule our euro membership as an act of "dogma" - even if it was in Britain's economic interests to join.

"That is not a serious policy for government," he said.