Be bold in Europe - Blair

" I say we go in there, we make the running and we make the arguments "
Tony Blair

His comments are being seen as some of his strongest yet on the EU.

The Liberal Democrats said a Labour election victory was now "looking likely" - and forecast that they could replace the Conservatives as the "most serious" opposition.

But former Tory prime minister Lady Thatcher dismissed her party's poor standing in the polls - insisting: "All is not lost".

'Self-confidence'

The remarks by Mr Blair followed the call by French Prime Minister Lionel Jospin on Monday for the harmonisation of business taxes.

And they came in advance of a speech on Tuesday by the President of the European Commission, Romano Prodi, who is expected to demand more power for Brussels.

Mr Blair, told journalists at the party's campaign news conference: "We have got to have some confidence as a country in the arguments we are putting forward in Europe.

"This is a country that I believe has got sufficient self-confidence and self-belief to go into Europe and win the argument.

"I say we go in there, we make the running and we make the arguments.

"There's an argument, a debate, going on in Europe.

"The place for this country is going in there, winning the debate on British terms."

Referendum

Conservative leader William Hague kept up pressure on the government over Europe by again focusing on any referendum on the euro.

" We would fight tooth and nail for a no vote but I want people to know it's not easy to do "
William Hague on euro vote

He said people should be told that the referendum campaign would be loaded against people fighting for a "No" vote.

"We would have the government's ability to set the question, set the timing, rig the funding - all against us and that would be very difficult," he said.

Mr Hague insisted that a Labour victory in the election would not mean that the battle to save the pound was lost.

The Tories would fight "tooth and nail" for a "No" vote in a referendum on joining the euro, but the odds would be stacked against them.

The Tory leader also predicted a Conservative government would be able to fight its corner in Europe - and win the concessions it wanted.

Former prime ministers Margaret Thatcher and John Major had proved it was possible by returning from summit meetings with victories over rebates and the single currency, he said.

" There will be no coherent opposition to a second term Tony Blair government - and I think that's where we come in "
Charles Kennedy

Meanwhile, Liberal Democrat leader Charles Kennedy predicted that his party could replace the Conservatives as the "most serious" opposition to Labour after the election.

Mr Kennedy, speaking during a BBC News Online webcast, said Labour was "looking the likely winner" in the election - and might romp home with a landslide.

He said the Tories would be in no position to oppose Labour after the election - and so the Lib Dems could fill the role, even if they did not win more seats than the Tories.

Predicting that the knives would be out for William Hague, he said: "The sound of cameras being set up and scaffolding being erected is almost audible around London SW1 at the moment."

"There will be no coherent opposition to a second term Tony Blair government - and I think that's where we come in," said Mr Kennedy.

But the former prime minister Lady Thatcher refused to accept that the Tories were facing defeat.

During a walkabout in Northampton, she said she was sure that her party's standing in the polls would improve.

"All is not lost - all is never lost," she said.