Britain yesterday declined to comment on a press report that Prime Minister Tony Blair had failed to resolve a bitter row over who should head the future European Central Bank (ECB).

"We've got nothing to say until a decision has been announced," said a spokesman for Blair's office.

In a dispute that has clouded preparations for the launch of European economic and monetary union (EMU) on January 1, the Netherlands and France each want their rival candidates, Wim Duisenberg and Jean-Claude Trichet respectively, to head the ECB.

The Observer newspaper said Blair, whose country currently holds the rotating European Union presidency, had failed to resolve the row. It quoted ministerial sources as saying the impasse was now so serious that a third candidate would have to be nominated.

However, the Sunday Times, said Blair had brokered a compromise deal that had been accepted by France and the Netherlands and was about to be finalised.

Under the deal, the Dutch candidate Wim Duisenberg would run the central bank, possibly for the first four years, with Trichet to take over at a later date, the newspaper added.

A diplomatic deadlock over the job could threaten the credibility of the bank if the issue is not resolved soon.