Lord Owen, a former Labour foreign secretary, left the party to set up the Social Democrat Party in 1981.

In an interview in the New Statesman, Lord Owen said he was "completely at home with New Labour".

'Don't join the euro'

Lord David Owen: "I strongly feel that Britain should stay playing a very active role inside the European Union"

He said he would have joined Labour before the last election if the Tories had looked like winning.

But in an interview with BBC Radio 4's Today programme he said he doubted he would join Labour as he had been out of party politics since 1992.

He said: "I do like a lot of what new Labour's doing but at the moment let's see what they are going to do with the euro.

Tony Blair: "Trying to redistribute"

"That's completely unknown territory and I strongly feel that Britain should stay playing a very active role inside the European Union but not join the euro, certainly not in any form of a hurry."

He complimented the government on its policies, saying many of them mirrored those of the social democrats in the 1980s.

Lord Owen said: "You can't point to a significant area of policy between '83 to '87 when I was leader of the SDP that isn't now the same as New Labour - that's the reality of the facts."

Although Mr Blair did not use the language of the Labour Party in 1960s and 1970s, Lord Owen did not believe the party leader had rejected its principles.

'Right priorities'

He said: "I think they are, with their concentration on social exclusion, and I think quietly on the basis of a successful economy, I think Gordon Brown and Jack Straw and Tony Blair are gently trying to redistribute, and I think that's the right social priority for social democrats whether they're in Britain or in Europe."

Lord Owen has campaigned against the United Kingdom joining the euro and has formed the euro-sceptic group New Europe.

Mr Blair would be in for a shock if he tried to take the UK into the euro, he said.

Lord Owen added: "I think it would be very difficult to take this country into the euro in the short term and by that I mean I don't think he'll be able to do immediately after perhaps winning an election in 2001.

"Who can tell what happens five, six, seven years ahead. That's very hard in politics.