Former minister Stephen Dorrell is to challenge Tory leader William Hague over Europe in a move seen as the first step towards a future leadership campaign.

Mr Dorrell, who stood down from the shadow cabinet earlier this week, made it plain he would be using his position on the back benches to argue the case against Mr Hague's anti-single currency line.

He also said he would be touring the country to argue for his own vision of how the Tory party should develop after its disastrous general election performance.

The announcement is reminiscent of Michael Heseltine's long leadershp campaign against Margaret Thatcher. After he stalked out of the cabinet over the Westland row, he assiduously toured the country building up his personal following.

Failed challenge

Mr Dorrell, who failed in the leadership contest to replace John Major after the election, hinted he still had the ambition to lead the Tories in the future.

Speaking in an interview in The Times newspaper, he said: "Reports of my retirement have been somewhat exaggerated."

And, in a BBC interview he insisted he did not want to write himself off and would still be "privileged" to serve in a Hague government.

He also denied he had "voted with his feet" on Mr Hague's leadership by stepping down from the shadow cabinet.

Hague: hard line challenged

He also mapped out his plans to join senior ex-ministers Mr Heseltine and Kenneth Clarke in championing the Europhile cause.

"It is powerfully in Britain's interests that that currency is a success. We need to think about the implications for Britain of a successful single currency.

And, in a direct rebuff to Mr Hague's policy of ruling out joining a single currency for at least nine years, he said Britain should leave its options open.

Leave door open

"I do not agree with the proposition which says that we should be deciding this issue as a matter of principle, because I think it's an issue that should be determined by an assessment of where our interests lie.

"I do not believe we shall know enough at the time of the next election to be able to conclude that our interest lies in joining or not joining," he said.

"Under our electoral system you do not get offered the chance of forming a government unless you get the votes of 14 million people and we are some four and a half million short of that," he said.

Mr Hague recently angered his pro-European wing with a fiercely anti-single currency speech. Both Mr Heseltine and Mr Clarke hit back and Mr Dorrell's intervention will ensure the issue continues to dog the Tories for the forseeable future.