The euro is heading for collapse because of the crisis in Greece, and a speedy demise may be better than a "slow death" for the single currency, former foreign secretary Jack Straw has warned.

Mr Straw became the most senior UK politician to say that the eurozone "cannot last", as he urged ministers in the House of Commons to prepare Britain for "alternatives" to the European single currency.

His comments came as EU finance ministers refused to hand the Greek government a second bailout package of 12 billion euro (£10.6bn) unless it agrees to implement a 28-billion euro (£24.8bn) set of austerity measures which include tax increases and massive spending cuts.

Finance ministers meeting in Luxembourg put off until July 3 a final decision on the loan instalment, without which Athens would be forced to default on its debts.

Downing Street made clear that Britain has not been asked to contribute towards the latest bailout, which is expected to involve only the 17 members of the eurozone.

But Treasury Financial Secretary Mark Hoban told MPs that the burden of supporting Greece may have to be shared by the International Monetary Fund, of which the UK is a major shareholder with a total subscription of £19.7 billion.

Mr Straw told the Commons that the UK's potential exposure to Greek debt, including of private banks, totalled £8 billion.

The Government needs to recognise the "mood change" in Europe, with former europhiles "contemplating the end of the euro as we know it", he said.

"What the Government should do, instead of sheltering behind the complacent language, weasel words: it's not appropriate, we shouldn't speculate, (is) recognise that this eurozone cannot last and it's the responsibility of this British Government to be open with the British people now about the alternative prospects," said Mr Straw.

"If this euro in its current form is going to collapse, is it better not that it happens quickly rather than a slow death?"