It was 'The Sun' wot swung it, or rather its owner

When The Sun reported two weeks ago that Tony Blair planned to call a referendum on Europe, the reaction from Downing Street was dismissive. The report was labelled by Blair aides as "wishful thinking" by a Eurosceptic newspaper that has long campaigned for the public to be given a vote on the proposed EU constitution.

In fact, the newspaper knew more about the Prime Minister's intentions than most of his Cabinet and senior officials. One person who was in the loop was The Sun's proprietor, Rupert Murdoch. Mr Blair tipped him off that he was considering a dramatic change of policy. It was no coincidence that another Murdoch newspaper, The Times, splashed the referendum story last week.

Why is a Prime Minister who boasts that he has "no reverse gear" suddenly making such a spectacular U-turn and taking his biggest gamble?

What tipped the balance, according to cabinet sources, was that Mr Murdoch made it clear he could not support the re-election of a Labour government unless it offered a referendum. The implied threat was that his four papers, notably The Sun, would not back Labour.

Jack Straw, the Foreign Secretary, who has never been a big fan of the EU constitution, formed an axis with the Chancellor, Gordon Brown, who did not want the issue to derail Labour's campaign at the general election expected next year. The cabinet balance swung in favour of a referendum when they enlisted the support of John Prescott, the Deputy Prime Minister.

Mr Straw warned Mr Blair that his refusal to allow a plebiscite would merely fuel the Tory campaign that the Government had something to hide. Far better to get the whole debate out into the open, Mr Straw argued.

This appealed to Mr Blair, who has long wanted to settle Britain's "half-in, half-out" relationship with the EU. He had hoped to do so by leading Britain into the single currency, but was blocked by Mr Brown and Britain's stronger economic performance than the eurozone.

Mr Blair was persuaded that he could slay the "myths" that the constitution would create an EU superstate by offering a referendum. Labour's private polling shows that people think the constitution would force Britain to join the euro and give up control of its defence and foreign policy. As one senior source said: "If you take the referendum out of the equation, people will focus on the detail of the constitution. Having a referendum will help that."

Mr Blair knew that a referendum would cut the ground from under the revived Tory opposition in the run-up to the European Parliament and local government elections on 10 June and the general election expected in May next year.

Government whips warned him that the House of Lords would almost certainly vote for a referendum when the Bill implementing the constitution came before Parliament.

"Why not get the credit for it - and win some brownie points from the Murdoch press at the same time?" some advisers told Mr Blair.

Cabinet ministers do not believe Mr Blair will serve a full third term if he wins the general election. Winning a referendum on Europe might at least allow him to go out on a high note.

But some Europhiles fear that Mr Blair will never tame the monster of the Eurosceptic media, a view reinforced by the hostile response to his move in yesterday's Sun and Daily Mail. A viewers' poll on Mr Murdoch's Sky Television showed that 86 per cent of people oppose the constitution and 14 per cent support it.

"This is terrible; we will lose the referendum and it will set back the European cause," one Europhile said last night.