The president of the European Central Bank, Mr Wim Duisenberg, has said a war in Iraq should not be used as an excuse to relax budgetary discipline, in a sign of rising tension among Europe's economic policymakers.

Mr Duisenberg's plea came just hours before finance ministers from the 12 euro zone countries met last night to discuss a possible relaxation of the EU's economic rules in case of a conflict.

Fears that the uncertainty created by a war would put struggling EU economies such as France and Germany under further strain have prompted calls by some governments for a change in the Stability and Growth Pact, the rules underpinning the euro.

Those concerns were heightened yesterday when the European Commission confirmed it was likely to cut this year's euro zone economic growth forecast from the 1.8 per cent. The Bundesbank, the German central bank, also said a protracted war in Iraq would further cut world economic growth.

However, Mr Duisenberg told the European parliament: "I would plead for not changing any of the rules in the situation of high uncertainty. Let the rules do their work, and I believe they are doing their work in an appropriate way."

Mr Duisenberg's intervention will boost the position of the European Commission, which has argued the pact should not be changed until at least next year.

Brussels officials, however, said euro zone finance ministers were last night expected to discuss possible changes to the pact in case of war. They noted that the ministerial meeting would take place alongside a special summit of EU leaders to discuss the Iraq crisis.

Under the pact, fiscal and monetary discipline can be relaxed in special circumstances such as natural disasters or political upheavals. But Mr Pedro Solbes, EU monetary affairs commissioner, has said there is no need for urgent changes for those reasons.

But the Commission has proposed some modifications aimed at making the pact more flexible, which are to be discussed by the 15 EU finance ministers at their Ecofin meeting today.

The ministers are also expected to attack Britain's public spending plans and rising deficit.

In his testimony to the European parliament, Mr Duisenberg quashed fears that the recent rise of the single currency would harm the euro zone's exports saying it was still undervalued compared with its theoretical level in 1997-98.

He appeared to damp hopes of an impending cut in interest rates, saying last December's half a percentage point cut to 2.75 per cent was enough for the time being.