Blair prepares for 'bruising battle' between rival visions of Europe

Tony Blair was on a collision course with Jacques Chirac last night as the Government prepared to announce that the UK was shelving plans for a referendum after Sunday's overwhelming French "no" to the EU constitution.

Mr Blair broke a holiday in Tuscany to make it clear that he now intended to use the forthcoming British presidency to lead a bruising battle between "old Europe" and "new Europe" over the reform of the EU economies. The French vote has placed the EU at the crossroads of a historic dispute over the future direction of the European Union.

As the ripples of France's resounding rejection of the constitution continued to wash across Europe, the European Commission's president, Jose Manuel Barroso said the French had created a "very serious problem" for Europe, whose enlargement plans have now been stopped in their tracks. The Dutch are poised to reject the treaty tomorrow by an even larger margin than the French, in effect killing off the constitution.

President Chirac will announce a new government line-up today under a new prime minister who is expected to preserve the French "social model" - a response to the result in France.

Mr Blair said the French result had raised fundamental questions about the EU economies. "What's important now is to have a time for reflection," he said. "I think underneath all this there is a profound question about the future of Europe and the European economy, and how it deals with globalisation."

Senior ministerial sources confirmed last night that the UK's referendum was in effect dead. Jack Straw, the Foreign Secretary, will tell the Commons on Monday that Britain wants to see economic reform agreed in Europe before the EU can return to ratifying the treaty by holding a series of referendums.

The Government is expected to insist it does not want to hold a referendum on the constitution until the French "no" has been overturned. The Government believes it is impossible to win a referendum in the UK on a document that cannot come into force as things stand - it must be ratified by all 25 states.

The Government's Bill to allow a referendum to go ahead has been shelved and while it was given a first reading, no date had been set for further progress. Ministers were careful to avoid being accused of influencing the Dutch vote by making plain their belief that the treaty was dead. Mr Blair said that the issue would have to be debated first at the Council of Ministers meeting in Brussels in June.

Sir Stephen Wall, the former adviser to the Prime Minister, said on BBC Radio: "It would not be sensible or even feasible to hold a referendum in Britain." Charles Kennedy, the Liberal Democrat leader, said: "I don't think the Government can proceed on the referendum next year." A Downing Street source said: "There may be an impasse with one group of EU countries saying we won't go down that road and there will be quite a serious debate about the future of the European economy. That is a debate we are prepared to have." M. Chirac, the German Chancellor, Gerhard Schöder, and Mr Barroso show no enthusiasm for the UK campaign for economic reform. They argue that nine nations have ratified the treaty and the process should continue. They also point to a declaration under which, if four-fifths of the countries approve it, the heads of government would hold a summit to consider the next steps.

The Government, however, believes the ball is in the French court and it is up to Paris to explain how it will overturn the result. Downing Street believes several other nations due to hold such polls, including the Czech Republic, Poland, and possibly Ireland, may side with Mr Blair in the fight for economic reform. But there were rumours of an emergency summit being called on Friday to stop Mr Blair putting the referendum on ice. EU heads of government are due to meet on 16 and 17 June.