Britain's intervention was attacked by opposition Conservatives yesterday as a doomed attempt to revive a sickly currency. Mr Michael Portillo, shadow chancellor of the exchequer, said that by intervening, the government had delivered "a huge vote of no-confidence in the single currency and the economic fundamentals behind it".

"The fear has to be that this is a short-term response to a serious, long-term problem," he said.

The last time Britain intervened in foreign currency markets was in September 1992, when an attempt by John Major's Conservative government to aid sterling failed spectacularly.

Then, speculators overwhelmed the Bank of England and forced Britain out of the European exchange rate mechanism. Black Wednesday, as it became known, marked the beginning of the end of Mr Major's government.

Yesterday, the Bank of England was not acting alone and political pride was not at stake. And the way the intervention was conducted may have added to Britain's foreign currency reserves, rather than sap them as it did in 1992.

Dealers said the British Treasury had instructed the Bank to sell sterling to buy some, and possibly all, of its euros, rather than exchanging dollars. Industrialists welcomed the intervention, arguing that it would help to restore British manufacturing competitiveness.

"The weakness of the euro has been a huge problem for British firms," said Ms Kate Barker, chief economist at the Confederation of British Industry.

The bank is notoriously cagey about its foreign exchange dealings. An official confirmed that the bank had taken action, but declined to elaborate. Details will emerge when the Treasury publishes its monthly statement on holdings of foreign currency reserves.