Tony Blair says agreement is being reached on the euro
Calling a referendum on joining the euro could create an "all-out internal civil war", Europe Minister Denis MacShane has reportedly said.
The comments came after Tony Blair attempted to play down reports of rifts within government over the single currency.
The prime minister said there was "an emerging consensus" among ministers on the approach to the euro.
Dr MacShane said a referendum on joining the euro was winnable, but questioned whether such a move was worth pursuing the trouble it could cause.
He later denied he had suggested a referendum would tear Labour apart, saying he was highlighting the dangers of an early referendum for the UK and Europe.
The government will announce its decision on euro entry on 9 June, with most commentators expecting a "not yet" verdict.
The key unanswered question, however, appears to be whether the possibility of a referendum before the next general election will be left open.
Dr MacShane's comments followed a speech on EU enlargement at Edinburgh University.
MacShane believes a referendum could be won
He later released a statement, saying: "I never at any stage in the discussion on the referendum issue
referred to the Labour Party.
"I have said consistently in interviews that if the chancellor and the prime
minister say yes we can win a referendum.
"What I have always tried to make clear to all my pro-European friends calling for a referendum irrespective of the economic tests, is that that would launch a long civil war in the UK with everyone fighting everyone.
"That would be bad for Britain and bad for the international community and
wouldn't help Europe. It's not about the Labour Party.
"What I have said again and again is that ministers and MPs are all of the
same view, well nearly all."
His words follow a week of speculation about government rifts over the euro decision.
This was fuelled by Peter Mandelson's suggestion that Mr Blair had been outmanoeuvred on the euro by Chancellor Gordon Brown.
In his original comments, Dr MacShane said he did not believe the British people would ever vote against their material self-interest.
He said pro-European parties had gained votes over anti-European parties since the EU's foundation.
Conservative shadow chancellor Michael Howard said: "Denis MacShane's words speak for themselves. There is already civil war within Labour on this issue.
"Britain's national economic interest is being sidelined by Labour's vicious infighting."
Mr Blair earlier claimed to have ministerial support for the principle of joining the single currency when economic conditions were right.
Cabinet ministers have individually been meeting Mr Blair and Mr Brown to examine the Treasury's studies into the case for joining.
Earlier on Thursday the cabinet held its first round-table talks on the impending decision.
Mr Blair said: "Each member of the cabinet and today the cabinet as a whole has made clear their support for the principle for joining the single currency, with its
potential benefits to Britain, to jobs and industry and standard of living of
the British people.
"And in addition each has made it clear that that decision, of course, must
be based on the rigorous assessment of our long-term economic interests."
I think when people reflect upon it they understand that it is not sensible
for Britain to separate itself out from Europe
Mr Blair suggested a referendum on euro membership could be won.
"People... understand that it is not sensible
for Britain to separate itself out from Europe."
The prime minister also stressed the need to look long-term when making a decision, not on stages in the economic cycle.
The cabinet will hold another meeting on the Treasury's assessment of the five tests on 5 June.
Pro-euro Liberal Democrat Treasury spokesman Matthew Taylor said the government should now let the people decide.
"The only consensus in the government appears to be dither and delay," he said.