The move is set to heighten the stand-off between Britain and its EU partners over attempts to introduce social legislation by the "back door".
Ministers intend to play for time by refusing to move on an imminent ruling from the European Court of Justice, requiring Britain to implement the EU working time directive, which is being introduced under health and safety legislation.
Ian Lang, President of the Board of Trade, yesterday told the British Chambers of Commerce annual conference in Birmingham that the Government would seek to resist the encroachment by the court on Britain's affairs and the "subterfuge" being used to impose the working time directive.
Robin Geldard, president of the BCC, said business would support the Government's stance. "We would not be in favour of breaking the law but the EU is effectively introducing this legislation through the back door and that is precisely the sort of thing it should not be doing. We would support the Government because imposing rigid rules like this is absolutely wrong."
He was speaking as delegates at the BCC's national conference in Birmingham rejected the introduction of further social legislation, warning that it would undermine competitiveness, but backed the idea of a single European currency.
Under the working time directive, employers would have to allow rest breaks after six hours' work, four weeks' paid holiday, a maximum eight- hour shift for night work and at least one day off a week.
Graham Mather, president of the right-wing European Policy Forum and an MEP, said the European Commission had already abused its powers in the way the working time directive was introduced and the European Parliament's social affairs committee was now drawing up a list of 87 further measures to extend the role of works councils, boost collective bargaining and include labour clauses in public works contracts.
He urged Britain not to join a single currency in 1999 and said the message from the conference to Brussels must be: "Yes to competitiveness and employment, no to the Social Protocol."
However, Geoffrey Martin, head of the European Commission in Britain, said that the debate over the social chapter had been overtaken by events. Both sides of industry were now sitting down to evolve and agree on a European social model while one of the aims of the Inter Governmental Conference would be to allow "flexible cooperation" in the way member states introduced standards of social protection.
Earlier Mr Martin criticised the Eurosceptics and their supporters in the right-wing press for arguing that Britain could operate as effectively outside Europe as part of a free trade area.
He said a single currency was now seen as an logical and necessary addendum to a single market, with enormous implications for Britain whether it joined or not.