Taoiseach Enda Kenny has said it would be a catastrophe for the EU if Britain were to leave.

British Prime Minister David Cameron yesterday pledged to hold a referendum on Britain's membership if the Conservatives win the next election.

Speaking on RTÉ’s Six One News, Mr Kenny said: “I don’t speak for the [British] government and five years is an eternity in politics, but Britain was always a driver for the single market and it should remain central to the European Union.”

Earlier today Minister for Communications Pat Rabbitte has said he was "taken aback" by what he called Mr Cameron's "very blunt undertaking".

Mr Rabbitte said he thought that lobbying by business, the US and other EU member states would have given Mr Cameron "cause for pause".

Speaking on RTÉ's Morning Ireland, Mr Rabbitte said he believed the best way for Britain to make progress on its priority issues was to be a full member of the EU, at the heart of Europe.

In a speech in London yesterday, Mr Cameron said his party would campaign for the 2015 election on a promise to renegotiate the terms of Britain's EU membership.

"When we have negotiated that new settlement, we will give the British people a referendum with a very simple in or out choice to stay in the European Union on these new terms; or come out altogether. It will be an in-out referendum," he said.

Mr Cameron said he would campaign for Britain to stay in the EU "with all my heart and soul", provided he secured the reforms he wants.

Business leaders have warned that years of doubt over Britain's EU membership would damage the economy and cool the investment climate.

Meanwhile, British Business Secretary Vince Cable has said he is "very confident" Britain will remain within the EU.

Speaking in Dublin, Mr Cable said that while the Liberal Democrats disagreed with Mr Cameron, they would now have to engage in the debate to ensure Britain stays in Europe.

Minister for Jobs Richard Bruton said Ireland accepted the "huge need" for reform in the EU, but believed it was better for Britain to remain in Europe.

He said there were many uncertainties facing the Irish presidency of the EU, but that the British referendum was not top of the list.