Michael Heseltine and Kenneth Clarke, the former cabinet ministers, undermined Mr Hague's Commons attack on the Government's new strategy by suggesting they would join an all-party campaign led by Mr Blair to win a "Yes" vote in a referendum on the euro.
Mr Heseltine hinted that there was a formal split in the Tory ranks because of the pro-Europeans' strong opposition to Mr Hague's flagship policy of ruling out single currency membership in this Parliament and the next.
The former deputy Prime Minister told the Commons it would take an all- party campaign to swing public opinion behind joining the euro, and asked for a categoric assurance that Mr Blair would lead such an "all-party alignment". Mr Blair replied: "I certainly intend to be at the forefront of that campaign myself."
Mr Clarke, the former Chancellor, said he welcomed Mr Blair's "marked change of tone" and his decision to "give some reality" to his policy of "prepare and decide" on the euro. He urged the Prime Minister to continue to "put his mouth where he thinks our money ought to be".
Sir Edward Heath, the former Tory Prime Minister, attacked the "pseudo arguments" put forward by the Tory opposition against the single currency.
But Mr Hague launched a strong attack on Mr Blair's statement. He mocked the Prime Minister for changing his tune since he wrote an article for The Sun before the 1997 general election in which said he "loved the pound".
The Tory leader accused the Government of denying the British people a choice by "bouncing" them into the euro by spending large sums of their own money to convince them that British membership was inevitable and a referendum decision a formality.
The national changeover plan, he said, was part of a "national handover plan" to hand over Britain's political and economic freedom before the country knew whether the single currency worked.
Mr Blair replied that the Tories were out of touch with public opinion, and their "ostrich strategy" would not work.
But Mr Blair also faced a split in Labour's ranks, as he fielded hostile questions from sceptics including Tony Benn, Dennis Skinner and Denzil Davies. Mr Davies warned that the common monetary policy would inflict far greater damage than the EU's common agricultural policy, which Britain was now seeking to reform.
Paddy Ashdown, Liberal Democrat leader, said Mr Blair's statement showed he had"crossed the Rubicon in favour of the euro", even though he pretended he had not.