Britain's economic interests would not be damaged by staying out of the euro, a former Tory Cabinet minister has claimed.

Former foreign secretary Sir Malcolm Rifkind used a new pamphlet for the No Campaign to claim that Britain could stay outside the euro in the long-term.

The senior Conservative claimed the UK could also take the lead in developing a more flexible EU.

Rifkind argued that with three EU countries not in the single currency, two not in Schengen and four limited in their contribution to common defence, Britain was not alone as an "outsider".

"Enlargement will transform the EU and make greater flexibility a political reality," he said.

He also launched a fierce attack on Tony Blair's "obsession" with the euro.

The prime minister's stance had led to a sense of drift which undermines Britain's ability to deliver real change in Europe, said Rifkind.

The former minister portrayed the prime minister as being driven by a sense of insecurity and lack of confidence in Britain's ability to shape the future direction of Europe.

"The prime minister's personal obsession with the euro has led to a sense of drift and muddle and undermined Britain's ability to bring about real change," he said.

"We should be positive about our euro opt out, become the champion of the pragmatists and use our influence to bring about a more flexible EU."

The intervention came as former Tory chancellor Lord Lamont said it would be better to be out of government than compromise on the European issue.

"If the price of the Conservative party gaining office was abandoning its policy on Europe, I wouldn't want to be in government," he told a fringe meeting of the Bruges Group.

And the man who presided over the Black Wednesday debacle denied that the Tories had to choose between Europe or victory.

"That is a completely false choice, we don't have to abandon our policy in Europe in order to win office," he added.