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Tony Blair said yesterday that Labour should have the courage of its convictions as a pro-European party by taking Britain into the single currency in the next few years.

The Prime Minister delighted supporters of euro membership by using his most positive language yet about the single currency in his speech to the Labour Party conference in Brighton. He made clear his preference for a referendum before the next general election.

Mr Blair said: "We should only be part of the single currency if the economic conditions are met. They are not window dressing for a political decision. They are fundamental. But if they are met, we should join, and if met in this Parliament, we should have the courage of our argument, to ask the British people for their consent in this Parliament."

The Prime Minister's surprisingly strong statement of intent was welcomed by pro-euro campaigners last night as a sign that he was finally coming off the fence. Although Mr Blair stopped short of promising a referendum before the next general election, he scotched the idea that he wanted to shelve the issue until he had won a third term.

A battle over whether Britain should join the euro looks set to emerge as one of the biggest issues in this Parliament. Close colleagues of Mr Blair said yesterday that he had always intended to "grasp the nettle" after winning a second term.

There have been conflicting signals since the June general election. Two prominent euro backers, Robin Cook and Stephen Byers, were moved from their posts as Foreign Secretary and Secretary of State for Trade and Industry, in which they had a say in the debate. There were signals, notably from allies of Gordon Brown, that Labour should focus on its plans to improve public services – on which it would be judged at the next election.

Despite the Chancellor's caution, Mr Blair has shown increasing signs of being willing to overrule him. The Prime Minister's language about the euro has gradually been getting warmer. In a speech written for last month's TUC conference, which was not delivered because of the US terrorist attacks, Mr Blair predicted the euro would be a success and added that it would be in Britain's interests to join.

In yesterday's speech, Mr Blair insisted that Europe was not a threat to Britain but an opportunity. He argued: "With 60 per cent of Britain's trade dependent on Europe, three million jobs tied up in Europe, much of our political weight engaged in Europe, it would be a fundamental denial of our true national interest to turn our backs on Europe.

"We will never let that happen. For 50 years Britain has, uncharacteristically, followed not let in Europe at each and every step. Britain needs its strong voice in Europe and bluntly, Europe needs a strong Britain, rock solid in our alliance with the USA, yet determined to play our full part in shaping Europe's destiny."

Mr Blair insisted the answer to Britain's relations with Europe was "not opting out but being leading members of a community in which, in alliance with others, we gain strength".

Simon Murphy, leader of the Labour members in the European Parliament, warned the conference that a delay in a euro referendum would damage the national interest. "The longer we wait before we make up our minds, the greater the risk of relegation from the European Super League," he said.