The majority of pubs, restaurants and shops in Llangollen have said they will accept the currency for the week during the International Musical Eisteddfod.

Thousands of visitors are expected at the festival

The plan has received support from several leading politicians - including Foreign Office Minister Peter Hain, Vice President of the European Commission Neil Kinnock and Treasury Minister Ruth Kelly.

Over 100,000 visitors from across the world are expected to descend on the town during the festival, which has been held every year since 1947.

As many as 300m people in 12 European countries have traded in euros since the currency was introduced in December last year.

Martyn Jones, MP for Clwyd South, said the eurozone was a way of welcoming people to the festival.

For British people, the euro will be shown to be a usable currency that holds no mysteries and carries no threats

Foreign Office Minister Peter Hain

"It will make life considerably easier for visitors as they will not have to face the inconvenience of changing currency when they arrive in the town."

"The response from traders in the town to the eurozone idea has been fantastic and has far exceeded my expectations," he said.

"I believe the creation of the eurozone will give a huge boost to business in the town."

About 80% of businesses in Llangollen have said they will accept the euro as valid currency.

However, the eurozone has not received the backing of everyone in the town.

A demonstration was held in Llangollen in May and people voiced their disapproval of the scheme.

Objection to the introduction of the euro has been mirrored across the UK where opinion polls continue to show a majority of people would vote "no" in a euro poll.

Mr Hain has defended the pilot scheme and said he hopes it will promote the use of the currency.

"For British people, the euro will be shown to be a usable currency that holds no mysteries and carries no threats," he said.

"Everyone gains from that."

The UK Government has said it will assess by June 2003 whether five self-imposed economic tests on joining the euro have been met before holding a referendum.