'Unpopular' Tories will not lead anti-euro vote campaign

Iain Duncan Smith will take a back seat in the campaign to oppose Britain's entry to the euro because there is a fear his party's unpopularity will damage the "no" campaign.

In a strategy rethink, the Tory leader will reject pressure from Eurosceptics to launch a drive to "save the pound" in the autumn, when Tony Blair is expected to promote the benefits of membership in the hope of calling a referendum next year.

The decision was revealed by Dominic Cummings, Mr Duncan Smith's director of strategy. He told The Independent: "The biggest potential threat to the pound's survival is the Conservative Party. If the Conservative Party were to define the anti-euro campaign and articulate its message as it has in the past, then Blair has a real opportunity to win a referendum." He added: "It is difficult for some [Tories] to accept – but nevertheless true – that for many people, just about the only thing less popular than the euro is the Tory party."

Mr Duncan Smith's rethink will alarm MPs who voted for him in theleadership contest because of his record as a Eurosceptic.

Tory chiefs fear Mr Blair will set them "a trap" this autumn by "road-testing" his campaign to take Britain into the eurozone in the hope that the Conservatives come out strongly against it. Pro-euro supporters want to see the Tories dominate the "no" campaign. One said yesterday: "We hope it will be run by Thatcher, Tebbit and Duncan Smith; that will suit us very well."

Tory strategists believe Mr Duncan Smith's decision to play down the euro issue has helped the "no" camp by persuading opponents, such as Eurosceptic Labour MPs, to speak out.

Mr Cummings, until joining Mr Duncan Smith four months ago, was director of Business for Sterling and helped run the umbrella "no" campaign. But he says the Tories will boost their prospects by playing a low-key role.

Mr Cummings said: "Blair's belief that the euro campaign is winnable has long been predicated on the hunch that the Conservative Party would take over the anti-euro campaign and destroy it. If the Tories were to behave as in the last Parliament when it comes to the euro referendum, Blair would have a chance of victory."

Mr Cummings said there was "a new realism" in the Conservatives, with Mr Duncan Smith believing the main task was to spell out how the party could make Britain better.

"We'll talk about the euro, of course, but that is different from being obsessive about it. We won't define ourselves by our opposition, or define the opposition by ourselves. The issue is far bigger than any political party," he said.

Mr Cummings believes Mr Blair will press ahead with a referendum next spring if the Tories are drawn into a full-scale battle to save the pound.

He said: "We have to talk about it [the euro] in a way that speaks to the whole nation ... If there's a referendum, then the Tories will have a place in the coalition but won't define the coalition. That is the crucial distinction.

"The good thing about this battle is that it's all in our own hands ... Blair can only win if we completely balls it up. I'm more confident than ever that the Tory party will change and that Blair will back off from a referendum he won't be able to win."