The five tests

Is it good for employment? What is the impact on our financial services industry? What will the effect be on investment Is there sufficient flexibility to cope with the change? Can convergence between the British and European currencies be sustained?

Both pro- and anti-euro Conservatives have condemned Labour's policy on the single currency as confusing.

Europe Minister Peter Hain instead said the government was taking a sensible approach by waiting for five economic tests to be reached before calling a referendum.

The comments attributed to Mr Byers have fuelled speculation that the government is gearing up to hold a referendum next spring.

But Downing Street stressed there were no plans for legislation unless and until the Treasury's five economic tests were met.

It will only be resolved when the prime minister gets off the fence and takes a very positive lead

Lord Heseltine

Tory leader Iain Duncan Smith claimed the prime minister had sent his transport secretary to brief journalists that he would start the referendum process this autumn.

He said: "When that news broke the prime minister panicked and denied all knowledge.

"What a way to run a government. More spin becomes more chaos."

'Common sense'

Conservative shadow Treasury minister John Bercow called for a statement to Parliament to clarify the situation.

Former Deputy Prime Minister Lord Heseltine, a supporter of the euro, accused Downing Street of "playing politics".

He said its denial was "couched in exactly the same words that the prime minister used before the general election when he said there wasn't going to be an increase in National Insurance".

Speaking on BBC One's Question Time, Lord Heseltine said Mr Blair would almost certainly have decided on a timetable for euro entry years ago.

Five tests for euros

He said: "This is a very serious issue of a massive importance to Britain and it will only be resolved when the prime minister gets off the fence and takes a very positive lead."

Mr Hain countered that attack, saying: "Downing Street was very clear this evening.

"It said you cannot have legislation considered until the economic assessment has been made and nobody knows whether it will be made before or after the Queen's Speech."

But, he said, it will be made before June next year.

Mr Hain added: "We should just calm down consider the facts, consider the arguments and I think we are approaching it in a common sense way."

'Delicious irony'

Liberal Democrat foreign affairs spokesman Menzies Campbell said this time Mr Byers may have to pay with his job.

"The hapless Stephen Byers has been caught out once again, but this time for telling the truth," he said.

Mr Campbell added: "It would be a delicious irony if Mr Byers were finally to lose his job on account of his truthfulness rather than for having misled the House of Commons."

Byers: under pressure

Mr Byers was reported to have said privately to journalists the legislation would be hurried through both the Lords.

This would allow voters to have their say some time next year - with speculation mounting of a 1 May vote.

The "unveiling" of the timetable comes amid growing signs the government is gearing up for a full-blown pro-euro campaign.

Tony Blair made some of his most pro-single currency comments yet during his marathon interview with Jeremy Paxman for BBC 2's Newsnight on Wednesday night.