The Prime Minister, David Cameron, says a referendum is the "cleanest, neatest, simplest, most sensible" way to resolve the debate on Britain's relationship with the European Union.
However, Mr Cameron refused to commit to holding the vote.
He said: "Europe is changing... that does open up the opportunity for Britain to get a fresh and better settlement."
In an interview with the Today programme, the prime minister also described Boris Johnson as a "first class" mayor of London who is "doing a great job".
"We are lucky to have some big and popular figures that can take the Conservative message out across the country," he said.
Mr Cameron discussed the party's proposed welfare reforms, commenting that the current system "doesn't work".
"We have to look at the signals we send, and should have a system where we say that you shouldn't be better off out of work than in work," he said.
"The system doesn't work today, so we need to reform it, but it's a proper conversation we've got to have with the public about welfare and how we make it work for everybody."
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