Prime Minister Tony Blair has agreed to front the cross-party Britain In Europe campaign set up to promote the UK's entry into the European single currency.

But his backing is based on the condition the group waters down its emphasis on the need to join the euro, concentrating instead on the UK's place in Europe.

And that has renewed fears amongst some pro-euro MPs that he is cooling on the whole project in the wake of his drubbing in the elections to the European Parliament.

The campaign, which has the support of pro-European Conservatives such as former Chancellor Kenneth Clarke and former Deputy Prime Minister Michael Heseltine, will launch next month.

It had always been thought that Mr Blair would lead it and the two former Tory Cabinet ministers had warned that, without him, the entire campaign would collapse.

But after the Tories won the European poll on a strongly anti-single currency platform, the prime minister appeared to be backing away from any commitment.

Losing enthusiasm

He even seemed to be signalling that he was losing enthusiasm for the single currency, fearing it could prove a massive vote-loser in the next general election.

But he has since confused many MPs by repeating Labour's existing policy - which would see a referendum on Britain joining the euro held swiftly after the next election.

On Monday Mr Blair's official spokesman insisted the referendum timetable remained on track. Pressed on whether the poll would, as originally envisaged, be held early in the next parliament, the spokesman replied: "Correct."

Many pro-euro campaigners had wanted the prime minister to head the new campaign and to go on the offensive over the issue, declaring his whole-hearted support for the single currency.

But the European election result made that impossible for Mr Blair and, in the end, the campaign leaders clearly decided it was better to water down their terms of reference than risk the future of the campaign.

As a result, the prime minister's hands have not been tied and it is still conceivable that he will water down the party's policy on the euro before the next general election campaign.

And Mr Heseltine has now insisted that Labour's position, characterised as "prepare and decide", is the sensible one and virtually identical to the "wait and see" policy adopted by former Tory prime minister John Major.

Tony Blair wants the UK to be a main player in Europe

He welcomed Mr Blair's move, telling BBC Radio 4's Today programme: "This is an issue of over-riding national importance. It has to be seen as such, and the only way that can happen is if the prime minister throws his full authority behind it."

Asked if the prime minister's support had been won at the expense of a dilution of the campaign's aims, Mr Heseltine said he "strongly" accepted this as politically realistic.

"One of the things I've always felt is that the single currency and our accession to it should very much be part and parcel of negotiations to get Europe to move in the direction that we want. In other words to a more entrepreneurial, deregulated, lighter-controlled economy."

Shift in focus

Speculation since the Euro-elections had centred on which, if any, Cabinet minister would attend the launch of Britain in Europe.

Downing Street's confirmation that it would be Mr Blair came on Monday, following an agreement with the campaign's organisers to shift the focus from the case for joining the euro onto the more general theme of the UK's place in Europe.

The campaign's chairman, British Airways chairman Lord Marshall of Knightsbridge, has reportedly accepted that the campaign's stance on the euro must now be based on Labour's "prepare and decide" position.

Mr Blair's official spokesman said: "As it was coming across, the Britain in Europe campaign was effectively a referendum campaign years before a referendum.

"But the truth is that Clarke, Heseltine and these business people are in exactly the same position as we are."

He added: "They are not saying join a single currency tomorrow, they are saying we should prepare to join and join if the economic conditions are met and the people give their consent."

'Give Mandelson euro-role'

Sir Ken Jackson, leader of the electricians' union the AEEU and a board member of Britian in Europe, wlecomed Mr Blair's support. But he called for an early euro referendum.

"If a definitive decision is not taken, it will dominate the [general] election," he told his union's conference in Jersey.

"We should have a referendum of the public before the election. The government has got to move faster."

He also called for Peter Mandelson, who resigned in disgrace last year over a secret loan from a ministerial colleague, to be given a new role as an ambassador in Europe.