Parliament will get the chance to debate the terms of any euro referendum, the Queen has confirmed.

"A draft bill will be published to enable a referendum to be held on the adoption of the single currency subject to the government's five economic tests being met," she told assembled MPs and peers in her annual address.

The move is seen as a concession to supporters of the single currency within government but is not indicative of a desire to press for early entry.

But the decision to only publish the bill in draft form means the chances of getting the legislation through parliament before the next election, expected in 2005, would be slim at best.

As an enabling bill, required before any referendum can take place, it is also no guarantee of an actual vote taking place at any time.

The Cabinet, and then parliament, would have to recommend entry before the decision was put to a public poll.

However the legislation will be a significant step in signalling the government's commitment to joining the currency in principle and in maintaining some momentum towards entry.

It will also provide an opportunity for MPs and peers to debate the terms of any referendum and raise the public profile of the issues involved.

But shadow foreign secretary Michael Ancram said the bill was "on the wrong referendum".

"The legislation on the European Union is a poor substitute for a bill calling for a referendum on the EU constitution," the Conservative spokesman said.

"This is what the British people want, and by failing to bring forward such legislation the government is showing total contempt for their views."

But the draft bill was welcomed by pro-euro campaigners.

"The commitment to publishing a draft referendum bill reinforces our belief that membership of the euro should be a matter of when, not if," said the acting director of Britain in Europe, Lucy Powell.

"But nor should a draft bill be allowed to obscure the rising price that we are paying for isolation from the euro.

"We are losing foreign investment and missing out on new trading opportunities in the eurozone. With 10 new countries due to join the EU next year and a constitutional treaty being drafted, this is not a time for Britain to be hanging back in Europe.

"The sooner we move from draft bill to real decision the better for Britain."

In addition, ministers will continue to pilot the European Parliamentary and Local Elections (Pilots) Bill through parliament.

The bill, which ran out of time in the last session, is designed to experiment with voting methods in a bid to increase turnout in next year's European poll.