The continuing 'bra war' with China highlights the need to modernise the EU, according to the prime minister's official spokesman.

Although Tony Blair "fully supports" EU trade commissioner Peter Mandelson in his bid to solve the trade dispute, Number 10 said the affair also illustrates the need for Europe to change.

The spokesman told journalists: "We support the commission and the commissioner fully in terms of their attempts to try and resolve this issue."

Alluding to the prime minister's recent speech to the European parliament, he added that the dispute was a "precise illustration" of "the need for Europe as a whole to modernise to meet the challenge from China and India".

It was a challenge "also for this country - not just in terms of its attitude to trade, but in terms of its attitude to education and doing what's necessary to meet the challenge coming from these countries".

"As we saw in this case, the pace of change is picking up speed all the time and therefore as a continent we have to meet that challenge, as a country we have to met that challenge," the spokesman added.

He also stressed that the EU Commission was the "sole negotiator" in the trade dispute.

"There are difficult balances to be struck in terms of, yes, support for free trade but also recognising there are implications for producers in particular countries," said Number 10.

"Therefore getting that balance is always going to be a difficult task.

"What we do is support the Commission in trying to reach agreement with China and with countries within Europe."