The Prime Minister has been under pressure to throw his leadership behind the Britain in Europe campaign after the Government's defeat in the European elections by the Conservatives, who campaigned against the euro.
Mr Blair's remarks now make it highly unlikely that he will join the campaign, although his official spokesman said last night there had been no change in policy. Euro-sceptics seized on his remarks to claim that he was cooling on the euro. The Prime Minister echoed the remarks he made in the Commons last week rejecting the Liberal Democrats' calls for immediate entry.
"There are three positions - two of which are daft," he said at the G8 summit in Cologne. "One daft position is to go in straight away regardless. That is not our position," he said. The other "daft" position was the Tories' policy of ruling out entry for a decade, he added.
Mr Blair will make a Commons statement today on the G8 summit before leaving for Belfast later in the week to tackle the peace process impasse.
Labour's European election defeat has sounded alarm bells at No 10 and Mo Mowlam, the Secretary of State for Northern Ireland, is expected to be appointed as campaigns co-ordinator for the party in the July reshuffle. Peter Mandelson's return will be delayed for a year.
The Prime Minister has also ordered a list of popular measures for the next Queen's Speech. The centrepiece is likely to be an integrated transport Bill, allowing charges on motorists commuting by car into towns, and giving statutory backing for a strategic rail authority to force rail companies to raise their performance.
The Queen's Speech will also include a Bill by David Blunkett, the Secretary of State for Education, for a new agency to help 16- to 18- year-olds into further education. Frank Dobson, Secretary of State for Health, will have two Bills. One will try to raise standards in the care of the elderly, the other will implement the Utting report recommendations on tacklinginstitutionalised child abuse.
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