Campaigners say 147,000 jobs - including 35,000 in the UK - rely on keeping duty-free.

Tony Blair and Lionel Jospin discussed the matter at an Anglo-French summit in St Malo on Friday and said they hoped to raise it at the EU Council meeting in Vienna later this month.

British consumers spend millions on duty-free alcohol and tobacco

Mr Blair said the UK and France agreed on the need to recognise the difficulties of replacing the system. The decision to scrap duty-free, taken in 1991, was based on the need to harmonise tax duties across the EU.

'Unsatisfactory'

"There is a very strong agreement here that it is right we raise this issue and raise it forcefully because the successor regime is not satisfactory," said Mr Blair.

But, although the UK and France may be powerful, a decision to change the duty-free ban will require unanimity among all 15 EU member states.

Mr Blair and Mr Jospin said they did not underestimate the difficulty of getting every EU member state to postpone the proposed change, which is due to come into effect on 30 June 1999.

But the pair said they believed momentum was growing behind the idea of delay.

Transport Secretary and Deputy Prime Minister John Prescott, said the UK, France, Germany and others were now warming to the idea of putting off the abolition of duty-free.

Mr Prescott said: "It's going to the top of the table now."

Mr Jospin said it was "a problem for hundreds of thousands of ordinary people".

Scandinavian alliance

Sweden, Denmark and Finland are at the forefront of the campaign to scrap duty-free.

Campaigners say the abolition of duty-free will lead to a rise in travel prices

The Duty-Free Confederation (DFC) welcomed the Anglo-French alliance.

Spokesman Richard Stocks said it was confident of persuading other European countries to support calls for a reprieve for the trade, which is worth £4.5bn per year across Europe.

He said: "There is still a long way to go and we need to persuade the Scandinavian countries.

"But now that the `Big Three' of France, Germany and the UK are backing calls for a new report into the effects of abolishing duty free we are feeling confident that we can save the trade."

Mr Stocks said Germany seemed intent on keeping the issue at the top of the agenda when it takes on the EU presidency in January.

A recent survey of 1,000 people, carried out by the DFC, showed two-thirds wanted Mr Blair to save duty-free shopping.

DFC spokesman Barry Goddard said: "The poll dispels the myth that duty-free shopping is a perk only for a minority of business travellers."

Campaigners say airlines and ferry companies will seek to compensate for the loss of income from duty-free sales by increasing ticket prices.