Tony Blair has pledged to "go for" a euro referendum, once the Treasury's five economic tests have been met.

If the tests are met, we go for it

Tony Blair

But he urged Europe to have the "courage" to tackle economic reform.

Speaking at Labour's annual conference in Blackpool, Mr Blair said the UK had to be at the heart of Europe - but he also warned of the dangers of a European "super-state".

The Treasury has pledged to complete the five economic tests by next June.

'Common defence policy'

The five tests assess whether the UK economy is in step with the eurozone and the impact of euro entry on the City, jobs, economic flexibility and investment.

Mr Blair told delegates in Blackpool: "The single currency is a fact but will Europe find the courage for economic reform?

"Europe is to become 25 nations. One Europe for the first time since Charlemagne - but will it be as a union of nation states or a centralised super-state?

"It has taken the first steps towards a common defence policy - but will it be a friend or will it be a rival to Nato?

"The answers to these questions are crucial to Britain."

Euro 'Destiny'

He said the only way to get the "right" answers was by "leading" in Europe, "not limping along several paces behind".

"That's why the euro is not just about our economy but our destiny.

"We should join the euro if the economic tests are met. That is clear.

"But if the tests are met, we go for it."

Pact to be scrapped?

Last month European Commissioner Neil Kinnock suggested the EC was ready to consider renegotiating the policy framework of the euro area to encourage British entry.

Speaking at a meeting of a pro-euro group Britain in Europe, Mr Kinnock suggested the stability and growth pact, which is designed to lock eurozone countries into a single economic policy, could be scrapped to encourage British entry.

But the European Commission will be looking for a firm commitment to entry from the UK government.

Union opposition

Some commentators have suggested the growth and stability pact could be replaced with a system modelled on the British one, giving more room for growth in public spending.

This would neutralise the objections of many on the left, who believe signing up to the euro would torpedo Labour's public spending plans.

Last month, the government narrowly escaped defeat over the euro issue at the TUC in Blackpool.

Three of the big four trade unions are now against early euro entry.