A debate which will rage until voters decide

The Tories claim the proposed European Union constitution would fundamentally change Britain's relationship with Europe by transferring more power to the centre from member states.

But the Government insists the constitution would allow the EU to operate more efficiently when it expands to 25 members next month. The Government says the constitution will ensure that national governments are in the driving seat.

These are the key areas over which the Conservatives and Labour will do battle in the run-up to the referendum announced by Tony Blair yesterday.

TAX

Constitution proposes: Qualified majority voting on moves to tackle cross-border tax fraud.

Tories say: Proposal could prove thin end of the wedge, and lead to a common tax policy as European Court rules in favour of gradual harmonisation.

Labour says: Government will not approve new constitution unless national veto on all tax matters is maintained.

FOREIGN POLICY

Constitution proposes: Appointment of an EU president to represent Europe on the world stage.

Tories say: Foreign policy would increasingly be run by Brussels, not Britain, as the EU gets a foreign minister with his own diplomatic service and new rights to sign international treaties.

Labour says: New president would ensure that the EU follows an agenda agreed by national leaders. National veto would remain on foreign policy, allowing Britain to retain control.

DEFENCE

Constitution says: Closer co-operation on mutual defence and the establishment up of a new research and military capability agency.

Tories say: This would lay the groundwork for a European army. Nato could face increasing marginalisation.

Labour says: Supports closer co-operation, but insists that national veto would remain. Britain's ability to mount military operations would not be restricted.

ASYLUM

Constitution proposes: A common policy in asylum and uniform system for protection of refugees.

Tories say: Government is handing power over the asylum system to European judges. It would become impossible for Britain to change international treaties and adapt rules to modern circumstances.

Labour says: Supports common policy, arguing that asylum issue must be tackled on a Europe-wide basis. Britain will retain control of policing its own borders.

CRIMINAL JUSTICE

Constitution proposes: To create an EU public prosecutor.

Tories say: People's rights on arrest, how much time some prisoners serve and some criminal laws are to be decided in Brussels. Charter of Fundamental Human Rights will increasingly give powers to unelected European judges, who could water down Britain's trade union laws, returning the country to "the bad old days of the 1970s".

Labour says: A veto is to be retained for key elements of criminal justice system. Although the Government may allow more majority voting on some procedural matters to help fight against cross-border crime and terrorism.

LEGAL BASE

Constitution proposes: To create a "single legal personality" for the EU.

Tories claim: This would give the EU a new status that would all but turn members into a single European state. EU law would have primacy over national law.

Labour claims: New blueprint will make EU "work better as a Europe of sovereign nation states" and bring together existing treaties. EU law already enjoys such primacy.

SOCIAL SECURITY

Constitution proposes: Introduction of majority voting for rules on benefits for migrant workers.

Tories say: This could open the door to a harmonised social security policy for the whole of the EU.

Labour says: Another "red line" that the Government would not cross. The Government will preserve the national veto on social security matters.