Blair still backs joining the euro – once Greek crisis is over

Tony Blair has declared that the time may still come for Britain to join the euro and dismissed predictions that the meltdown in Greece will cause the single currency to break up.

The former prime minister, whose ambition to take the UK into the eurozone was blocked by Gordon Brown, believed the euro would overcome its crisis and that the case for British membership could become "compelling".

His remarks will cause surprise. Although Labour still supports euro entry in principle, senior figures in the party admit there is no prospect of trying to join for some years, let alone winning a referendum on the issue.

"I don't actually take the view that some people take, that Britain joining the euro, in the past or now, will be a disaster.," Mr Blair told the BBC's Politics Show in an interview to be broadcast tomorrow. "The case for Britain joining is not compelling. It may become that at a certain point," he said. "I was always absolutely in favour of doing it politically and still am, by the way." But he conceded that a referendum would never be won unless a compelling economic case were made for it.

Mr Blair said the logistics of recreating individual currencies were "immense", but added: "For Europe, no, I don't think they're going to give up the single currency. Now that's not to say there aren't huge issues to do with how you get through the next months."

David Cameron was quick to attack Mr Blair's comments, saying it would be a "dreadful idea" for Britain to sign up to the euro. He said: "I think we will stay out of the euro and certainly as long as I am doing this job there is no prospect of Britain even contemplating joining the euro."

The Prime Minister has finished a two-day summit of EU leaders overshadowed by the turmoil in Greece. Mr Cameron saw off an attempt by Angela Merkel, the German Chancellor, to draw Britain into the proposed package of emergency loans for Greece. It will be restricted to the 17 eurozone countries.

But the British and and German leaders joined forces to block a plan by the European Commission to suspend the rule allowing EU members to return asylum-seekers to the country where they entered the EU because of the exodus of people fleeing North Africa in the Arab spring. "We want controlled migration in Europe and above all in Britain," said Mr Cameron.

He has appointed a former senior Treasury official with a reputation for hard bargaining with Britain's European partners to be the UK's ambassador to the EU. Sir Jon Cunliffe worked closely with Mr Brown at the Treasury and 10 Downing Street, helping him to draw up the five tests the former chancellor used to block entry to the euro. He is seen as a Treasury hawk more sceptical about the European project than most Foreign Office diplomats. "He's tough and strong and he will stand up for Britain's interest, which is absolutely what you need," said Mr Cameron.

Sir Jon will move to Brussels to face a bruising battle over EC plans to boost spending from 2014-20. Mr Cameron wants a freeze on EU budgets.

In a shake-up of top diplomatic posts, Sir Jon will replace Sir Kim Darroch, who will become Mr Cameron's national security adviser. He will succeed Sir Peter Ricketts, who will become UK ambassador in Paris. The incumbent, Sir Peter Westmacott, will move to Washington.

Why didn't Blair do it when he had the chance?

Could Tony Blair ever have achieved his driving ambition to take Britain into the EU's single currency?

With another week of turmoil expected in Greece, it feels like a distant dream. Yet close allies believe Mr Blair could have persuaded a cautious British public if he had called a referendum in his first term, when his personal ratings were high and a Europhobic Tory opposition was in disarray.

For a while Gordon Brown was keener than he became, according to Blairites. Some even suspect the then Chancellor of the Exchequer blocked Mr Blair's attempt because he wanted the glory of taking Britain in.

Mr Brown insists he was "virtually alone" in the 1997 Cabinet in expressing doubts and was ready to resign if Mr Blair had pressed the button.

Mr Brown's famous "five economic tests" were designed to give maximum room for political manoeuvre. Crucially, the Treasury was judge and jury.

Mr Blair could perhaps have changed history by moving Mr Brown to the Foreign Office after the 2001 election and installing a pro-European as chancellor, such as Robin Cook or Charles Clarke. Mr Blair certainly considered it. But Mr Brown made clear he would rather go to the backbenches and Mr Blair backed off.

The Blair dream really died in the 2003 Iraq war. After that, he was never going to be trusted by enough voters to win a euro referendum.