Shopkeepers in Oxford Street, a magnet for tourists from Europe, told news media they sold goods against the euro as well as pound sterling, though some shopkeepers admitted they charged extra while accepting the euro.

Britain is one of three European Union member countries -- the other two are Denmark and Sweden -- that remain out of the single currency system.

Small bands of anti-euro protesters from a 'Campaign for an Independent Britain' marched into the City, London's financial district, to call for continued British rejection of the single currency. But City sources said London financial houses traded hundreds of millions of the euro on the first full day of business across much of Europe.

Indications that Britain could adopt the euro by default as an unofficial second currency were reinforced by the business response. Simon Buckley, campaign director of Britain in Europe campaign, told the Times newspaper before the euro's entry, "Oxford Street is leading the way in Britain by welcoming the euro. Anti-Europeans might try to keep Britain out of the euro, but they can't keep the euro out of Britain."

Politicians supporting Britain's adoption of the new single currency for Europe urged the government to decisively back the euro. Lord Michael Heseltine, a deputy prime minister in the former Conservative government, said Britons would vote for the country adopting the euro if the government took a decisive lead.

Heseltine said that a broad coalition from all three main parties, industry and trade unions would swing behind the yes vote, but only when Prime Minister Tony Blair took a lead on the issue.

But Conservative Party chairman David Davis said up to 70 per cent of British people were still against giving up the pound, and wanted Britain, the world's fourth largest economy, to retain control of its monetary system.

He said the euro was "fundamentally flawed" and was not right for Britain.

Europe Minister Peter Hain urged businesses to lead the way and accept the euro alongside the pound.

Last week, European Commissioner Neil Kinnock, a former Labor Party leader, predicted that the euro would soon be as readily accepted in the high street as sterling.

"People will quickly realize that when they touch a euro their fingers will not drop off, despite the attempts of anti-Europeans to portray it as some sort of dreadful plague," Kinnock said.

He said it was not a case of whether Britain joined the euro but when. "The case for Britain being in the euro is exactly the same as the case for Britain being in the European Union," Kinnock added.

The Liberal Democrats, meanwhile, urged Blair to fix a date for a referendum on whether Britain should join the eurozone and dismissed his preconditions for membership.

Liberal Democrat leader Charles Kennedy called the government's five economic tests as a "fig leaf" that would allow it to put off a referendum decision.