British Premier Tony Blair addressed the annual Labour Party Conference in Blackpool, England on Tuesday and gave the strongest indications yet that he is steering the country towards the euro.

But while he spoke of the euro as Britain's 'destiny', the Prime Minister urged the 12 euro-zone countries to show bravery in the face of economic reform.

"The single currency is a fact but will Europe find the courage for economic reform?" Mr Blair told delegates in Blackpool.

Great Britain is one of the last full EU members to keep its old currency. So far Germany, Holland, France, Italy, Spain, Portugal, Greece, Ireland, Luxembourg, Finland and Austria have taken on the new euro.

Five economic tests will determine Britain's euro future

While euro-sceptics and an unconvinced populace debate the possibility of relinquishing the pound sterling and joining the European single currency, Mr Blair and his Chancellor of the Exchequer, Gordon Brown, have been preparing for the five economic tests that will show whether Britain is ready for the euro.

The five tests assess whether the economy is in step with the eurozone and the impact of euro entry on the City -- the financial centre of Britain -- jobs, economic flexibility and investment. The Treasury Department has pledged to complete the five economic tests by next June.

"If the tests are met, we go for it," Blair said.

Mr Blair said that the UK had to be at the heart of Europe - but he also warned of the dangers of a European 'super-state'.

"Europe is to become 25 nations. One Europe for the first time since Charlemagne - but will it be as a union of nation states or a centralised super-state?" he asked delegates. "It has taken the first steps towards a common defence policy - but will it be a friend or will it be a rival to Nato? The answers to these questions are crucial to Britain."

Mr. Blair went on to say that the only way to get the right answers was by leading in Europe, not limping along several paces behind.

"That's why the euro is not just about our economy but our destiny," he said.

Former leader suggests a policy change to get Britain in

Last month, European Commissioner Neil Kinnock, a former Labour leader, suggested the European Commission was ready to consider re-negotiating the policy framework of the euro area to encourage British entry.

Speaking at a meeting of a pro-euro group 'Britain in Europe', Mr. Kinnock suggested the stability and growth pact, which is designed to lock eurozone countries into a single economic policy, could be scrapped to encourage British entry. But the European Commission will be looking for a firm commitment to entry from the UK government.

Some commentators have suggested the growth and stability pact could be replaced with a new system which would give more room for growth in public spending.