But Tuesday’s Financial Times reported that after the Swedish verdict, prospects for a British referendum before the next election - likely to be in 2005 or 2006 - seemed "unimaginable to pretty well everyone outside Downing Street".

The London-based business daily said Tony Blair had told colleagues privately he still believed circumstances governing Britain's entry could change at any moment. An upturn in the European economy next year might make the conditions for winning a referendum more favourable.

The paper predicted over the next few months the government would be repeatedly seen to play up the possibility of euro entry ahead of next spring's budget, when the case for entry will be re-examined.

Blair would not want to rule out a referendum before the election, the paper said, adding that to do so would undermine Britain's influence in talks on the new European constitution.

Posturing

One senior government figure told the FT: "When you hear the prime minister bang the euro drum, what you are really hearing is a lot of posturing.”

Swedish Premier Goran Persson
saw his voters reject the euro 

"When he talks about euro entry that's a posture designed to keep our European allies happy."

The rightwing Daily Mail newspaper reported that finance minister Gordon Brown had slashed the Treasury's team assessing Britain's readiness to join the euro from 100 to 10, in a move which fuelled speculation the government had ditched any hopes of early entry.

Sweden's rejection of the single European currency in a referendum was seen by observers as a nail in the coffin of Blair's dream of leading his country into the European Economic and Monetary Union (EMU). But the British government publicly insisted the Swedish verdict would not affect its own position.

The British pro-euro campaign has been floundering since the government's "not yet" verdict in June on whether to adopt the euro based in its five economic tests.