Blair's euro 'gaffe' that never was

Mr Blair is currently on holiday in Mexico

It seemed like political dynamite: Tony Blair declares that he wants to be remembered as the prime minister who dumped the pound and took Britain into the single currency.

Overturning at a stroke the government's softly-softly approach to the euro, it would have sent shockwaves around Westminster and sparked a major domestic political row.

The words attributed to the prime minister he did not say

Downing Street spokesman

The reaction of Chancellor Gordon Brown could only be guessed at.

Except Mr Blair never said it.

As Downing Street scrambled to limit the damage and newspapers prepared their revelatory headlines it emerged a reporter had slipped-up.

Brazil interview

It happened as Mr Blair was interviewed for the Brazilian magazine Veja during his recent visit to South America.

He was asked how, as prime minister of an "English" government for two terms, he wanted to be remembered.

How appropriate that Tony Blair should choose Brazil to say something nuts

Sun editorial before magazine's mistake emerged

Mr Blair is reported to have replied: "As the socialist who changed socialism, as the prime minister who took England to monetary union with the other European countries..."

Downing Street reacted swiftly as the story broke on Wednesday night.

A spokesman said: "The words attributed to the prime minister he did not say. Point blank, 100%."

He added that confusion had been fuelled by a complicated question and that Mr Blair had not even mentioned the subject of the single currency.

Then it emerged what Mr Blair actually said was "European Union" instead of "monetary union" - in the circumstances a crucial difference.

One national newspaper, the Sun, was forced to hurriedly pull a front page article and hard hitting editorial published in early editions of Thursday's paper.

Uncertainty warning

Meanwhile the Liberal Democrats took the opportunity to urge Mr Blair to take a lead on the issue of the single currency.

Spokesman Edward Davey said: "This confusion of claims and denials will continue until Labour sorts out its policy on the euro.

"The government's silence on the single currency is breeding uncertainty and is damaging to British industry."

The Veja magazine interview has already caused problems for Mr Blair - he was reported to have accused the French government of delaying his efforts to promote free trade.