The Cabinet's hard-line decision, which marks the most hostile stance yet taken by ministers against Brussels interference, was taken at a meeting of ministers attended by Kenneth Clarke, the Chancellor, and Malcolm Rifkind, the Foreign Secretary.
If the move is upheld by the ECJ, Britain would have to introduce laws providing for rest breaks after six consecutive hours, a minimum daily rest period of 11 hours; four weeks' annual paid holiday; a maximum eight- hour average shift for night work; and at least one day off a week. The Government won exemptions for rail, air, road, sea and inland waterways workers, and for junior doctors and priests.
Senior Home Office sources have told the Independent that if the European Court judgment goes against Britain, as expected, the Government will "play for time" and refuse to move on the ruling before the general election.
Michael Howard, the Home Secretary, failed to win support for a more direct rejection of the ruling at a meeting last week of the Cabinet committee on overseas policy and defence. His supporters said the Foreign Secretary, the Chancellor, and Sir Patrick Mayhew, the Secretary of State for Northern Ireland, were among those opposing tougher action.
But the Cabinet committee agreed that Britain will not legislate until after it has exhausted negotiations for reforms of the ECJ through the inter-governmental conference, which could last for most of next year. In the meantime Whitehall civil servants have been ordered to be less zealous in implementing directives from the European Commission.
Mr Howard, the Cabinet's leading Euro-sceptic, will also announce plans to recover some powers from Brussels over emergency planning for civil disasters such as nuclear accidents and floods.
The Home Secretary's move was hailed by Euro-sceptic Tory MPs as part of a much wider strategy to challenge the powers of the European Court. "It is very significant. It is the start of rolling back the influence of the EU," said a ministerial source.
The Court was expected to announce by Thursday whether it intends to uphold the interim judgment by a French advocate-general, but European Commission sources said it could be delayed until the autumn.
Ministers believe they can turn the tables on Labour by opposing the regulation, which they believe will hit business and cost jobs. The Euro- sceptics, as disclosed last week in the Independent, have agreed to an armistice in advance of the general election. But yesterday the pro-European wing of the Tory party, led by Douglas Hurd and Lord Howe, two former Foreign Secretaries, fought back with a pamphlet, "Time to return to Euro-sanity", intended to counter the influence of Sir James Goldsmith in calling for a referendum on Britain's membership of the EU.
Sir James will raise his banner in the Commons tomorrow with a speech to the Parliamentary Press Gallery. It will be attended by many Tory MPs, in spite of the Prime Minister's order to stop Bill Cash taking funds from Sir James for an anti-EU think-tank.
Mr Hurd accused the Euro-sceptics of a "poisonous and prejudiced" debate over Europe, which had obscured the Government's "admirable" white paper on Britain's role in the EU. He told a press conference that Mr Howard's attempt to renegotiate part of the Maastricht treaty should not be the start of an attempt to diminish the supra-national powers of the EU. "You need supra-national organisations for an effective single market in which people don't cheat. You need a directly elected European Parliament. They are potential allies," Mr Hurd said.
Edwina Currie, another member of the pro-European Tory group, said Britain had never elected a Euro-sceptic Government - a clear warning that the Tories' election chances could be wrecked by a Euro-sceptic manifesto.