Mr Dorrell's readiness to speak out against the Euro-sceptic approach of the Tory leadership raises the spectre of a further split in the Tory ranks, which would end the Tories' faint hopes of being re-elected at the next election.
The former Cabinet minister allied himself with Kenneth Clarke, the former chancellor, and Michael Heseltine, the former deputy prime minister, in opposing the strongly Euro-sceptic policy of Mr Hague, which was reinforced by the shift to the right in his shadow cabinet reshuffle on Monday.
But in a clear warning that the Tories could be in the wilderness if they become a Euro-sceptic sect, Mr Dorrell said the Tories lost four million voters between 1992 and 1997. "If we are going to regain office, we have to explain to people why those people should come back to a party that they deserted between 1992 and 1997. It's the redefinition of what the Conservative Party stands for."
Mr Dorrell said the opinion polls last week putting the Tories and Mr Hague's leadership further behind Labour and Tony Blair had showed that the party was failing to meet the challenge of rediscovering its identity after the election defeat.
He said he had left the Shadow Cabinet because he wanted to develop ideas "across the political spectrum". He said: "What I want to be able to do is use the fact I have some experience in business and in government to sketch out ideas and values for the next 10 years.
"The thing the Conservative Party has to reconcile itself to is that however ill-judged we may have thought this project to be, there is now going to be an attempt to set up the single currency.
"It is powerfully in this country's interests that project succeeds because it is not in our interests to have our major trading partners tied up in an experiment that is seen to fail. The implications of the success of the single currency are something the Conservative Party needs to think about."Reuse content