Europe Minister Caroline Flint has been forced to deny that the government is planning to abandon the pound and push Britain into the euro.

Her denial came after Shadow Chancellor George Osborne accused Labour "euro-fanatics" of preparing to soften up the country to join the euro by seizing on current economic difficulties for political ends and an admission by Business Secretary Lord Mandelson that adopting the EU single currency was the "right long-term policy objective".

European Commission President Jose Manuel Barroso had already indicated that "the people who matter in Britain" were "currently thinking about" moving to the euro and "some British politicians have already told me, 'if we had the euro, we would have been better off'."

Ms Flint said it was "nonsense" to suggest that Labour was ready to embrace the euro, but Shadow Foreign Secretary William Hague has put down Commons questions demanding to know whether Gordon Brown has discussed euro membership with Mr Barroso and when the Cabinet last considered the matter.

It is well known that the Treasury has a Euro Preparations Unit and it has recently come to light that £43 million had been spent on the project up to 2004.

The unit planned a massive campaign to try to convert UK public opinion in favour of the euro. This was to include compulsory lessons on the currency for schoolchildren and a publicity campaign using TV programmes such as Who Wants To Be a Millionaire?

The government has always promised a referendum before any move towards scrapping the pound – but it also promised a referendum on the Lisbon Treaty, and we all know what happened to that.