A FRENCH government spokesman, Mr Alain Lamassoure, expressed confidence yesterday that the European Commission would approve France's decision to use a one off payment from France Telecom to reduce its budget deficit and help it qualify for European, monetary union.

"We have no reason to think the Eurostat decision will be different than what we believe right now," Mr Lamassoure, who is also budget minister, told reporters after a, cabinet meeting.

Eurostat is the statistical arm of the European Union executive.

On Tuesday, the franc fell against the D mark after reports that an accounting working party had not approved the 37.5 billion franc France Telecom transfer, seen as vital to France reducing its deficit to 3 per cent of gross domestic product to qualify for monetary union.

French finance ministry officials denied the report.

A European Commission source said yesterday that German, British and Dutch officials had argued against allowing France to use the transfer. "There was a small minority, two or three countries, that expressed doubts," a spokesman said.

However, the decision on whether the plan should be allowed would be taken by the director general of Eurostat in the next few days and would be based solely on technical grounds, he said.

The payment by France Telecom is in exchange for the French government assuming the state owned telephone operator's pension liabilities ahead of its partial privatisation but some critics have said the move smacks of creative accounting".