The British Prime Minister, Mr Blair, has launched his fight-back against what he called extreme anti-Europeanism as he warned that the British Conservative Party risked taking Britain out of the EU completely.

On the same day as his party called for an overhaul in the proportional representation system used for the Euro-elections after Labour's dismal showing in the polls, Mr Blair branded Tory policies on the single currency as a dangerous fudge.

He told the London Business School he wanted to challenge the "forces of anti-Europeanism" which could do "real and fundamental damage to our national interests".

He said: "To anyone closely watching this issue, alarm bells should be ringing. Many in Britain have moved from Euro-scepticism to straightforward anti-Europeanism.

"I believe that this new extreme anti-Europeanism has no economic logic, is damaging to Britain's economic interests today and must be firmly resisted."

Mr Blair said: "The Conservative Party of 1999 is making the same error as the Labour Party did in 1983. A reflex anti-Europeanism has left it lurching down an extremist path and contemplating the complete withdrawal from Europe."

He added: "To be in or not to be in - that's the question. In the end we have always chosen to be in. Any British government, governing for the true national interest, always comes back to the same place. It is not weakness, or the beguiling embrace of European allies; it is stark reality, good old-fashioned British pragmatism that brings us there.

"Europe matters politically and economically. Influence and partnership in Europe is essential to the British national interest."

The speech was billed as an attempt to stop the roll of the anti-European bandwagon and a rebuff to suggestions that the government was preparing to delay a referendum on the single currency.

However, the Shadow Chancellor, Mr Francis Maude, responded: "I think it's extraordinary that Tony Blair seems now to be maintaining that there are only two positions you can adopt on Europe. The first is that you accept everything that comes out of Brussels, including the social chapter and the euro - scrapping the pound - and if you don't accept all of that, then you have to leave altogether.

"Both of those are extreme positions and actually most people don't agree with them. Most people agree with us that you can be in Europe without being run by it," he said.