The studies come alongside the five tests

The prime minister was responding to questions about his view that there are "daunting" problems within the eurozone economy.

We have not made as much progress on economic reform as we should have. Tony Blair

Mr Blair said the March summit would be important in making progress towards overcoming those problems.

On Monday, comments by the prime minister in a foreword to a government report on European economic reform were perceived by some as a sign that he has abandoned hopes of holding a euro poll this year.

That was backed by the tone of the Treasury report, which said the European Union must speed up economic reform and liberalise markets if the euro is to be a success.

It said European monetary union meant the EU needed the "flexibility" to react to sudden changes in economic circumstances.

But Mr Blair said the government's position on the euro - that calling a referendum depends upon an assessment of five economic tests by June this year - had not changed.

He said problems in the eurozone economy were not insurmountable.

Blunt

Speaking at his monthly press conference, Mr Blair said: "This is the big challenge facing the euro economy.

"But that doesn't alter our position on the single currency at all.

"Can we make progress this year? I think we do need to make progress at the March summit.

I think the March summit is important. We have not made as much progress on economic reform as we should have.

"That is the blunt truth and you can see that in the economic figures, which is why it is important that we push the process on."

In the report on Monday, the Treasury warned that a series of reforms agreed at the Lisbon summit in 2000 were not being implemented swiftly enough, risking a "cycle of cynicism and underperformance".

Premium

The remarks come in a technical paper published in advance of next month's council meeting in Brussels.

And they reflect Chancellor Gordon Brown's concerns over the speed of economic reform in Europe.

"To be successful in EMU, countries need even more flexibility to adjust to change and to unexpected economic events, since the ability to vary interest rates and exchange rates within the euro area no longer exists," said the paper.

"EMU membership puts a premium on ongoing reform of EU labour, product and capital markets, delivered through the Lisbon agenda.

"The government will continue to argue that employability, flexibility and stronger competition policies must be a top priority, so that EMU can be a sustained success."

Active

Mr Blair said in an introduction to the paper that member states were "still not doing enough" to tackle some fundamental barriers to job creation in the EU.

"We know what has to be done - to restructure tax and benefit systems to make work pay, to remove the self-defeating incentives to retire early, and to pursue active labour market policies that match new opportunity for the unemployed with responsibility on their part to take jobs," he said.

Anti-euro campaigners seized on the report, with George Eustice, director of the no campaign, saying it meant the government's five tests on euro entry would not be met.

He said: "This report makes it impossible for the Treasury to claim that its 'flexibility' test has been met.

"The eurozone has failed to reform its economy, and without this reform, Britain should not consider locking into the euro."

But Britain in Europe welcomed Mr Blair's comment that the euro had "underpinned and strengthened" efforts to make the European single market the most competitive and dynamic in the world.

Philippe Legrain, Britain in Europe chief economist, accepted that more needed to be done to improve flexibility, but said "important progress" had been made.

He said anti-euro campaigners should not "be allowed to use this report as yet another pretext for their narrow-minded opposition to the euro".

"Although progress on the Lisbon agenda would boost the euro's positive impact, Europe's single currency is already providing a significant stimulus to competition, innovation and economic growth," he added.