CHANCELLOR Gordon Brown today announced tough new powers to block the funding of terrorist groups.

Mr Brown told the Labour Party conference that ready access to money is the "lifeblood of terrorism" and must be stopped.

He revealed the Government had already frozen £60m of UK-based assets suspected of belonging to Afghanistan's Taliban regime - including a bank account held at the London branch of a European bank.

But he said police would now be given even greater powers to monitor and freeze the accounts of people suspected of involvement in terrorism.

At present, they are only allowed to do this when the money contained in the bank account is believed to have been obtained through criminal activity.

In the future, police will be able to apply for warrants to monitor and stop accounts containing "clean money" destined for terrorism purposes.

Mr Brown told delegates in Brighton: "It has now fallen to our generation to bear the burden of defeating international terrorism.

"Ready access to finance is the lifeblood of modern terrorism. No institution, no bank, no financial house anywhere in the world should be harbouring or processing funds for terrorists."

The news comes after Prime Minister Tony Blair announced plans for emergency legislation to close the net on terror suspects.

These will include measures to tighten up the asylum laws, speed up the extradition process and to stop bureaux de change being used to launder money for terrorism and drug trafficking.

Mr Brown argued that pursuing a stable domestic economic policy was one of the best responses to the terrorists.

"We will show by our actions, in maintaining conditions for stability and growth, that we do not surrender to terrorist threats," he said.

He pledged that current cash increases for health and education were already locked in.

But, with the international crisis sparking continuing fears of a global recession, and the costs of military action against terrorism still unknown, he said the economy was facing "testing times".

He said the Government would not "relapse back into the old irresponsible fixes of the past".

"We have not come this far together and taken so many difficult decisions to put it all at risk," he added.

Prime Minister Tony Blair, said action would be taken to prevent billions of pounds a year of illegal funds being "laundered" through bureaux de change.

The bureaux currently falls outside the financial regulatory system and can easily be exploited by terrorists and other criminals seeking to launder money.

Government sources estimate that up to £4 billion a year leaves the country through bureaux de change and that 65 per cent comes from illegal sources. Only eight per cent is for legitimate holiday travel. Financial regulators are to be given powers of inspection and it will be an offence for high street banks to deal with unlicensed bureaux de change.

The then Home Secretary Jack Straw said shortly before the last election that bureaux de change and money transmission agents would be regulated as part of a crackdown against organised crime.

He said there was clear evidence that some bureaux had become significantly involved in money laundering.

A "light touch" regulatory regime would require bureaux to register details of ownership and agree to a new code of practice. Failure to comply would lead to fines or closure.

Britain is the only European Union country that does not regulate the sector and there is evidence that large amounts of money are laundered every year.

Research found that one outlet was used to launder £70 million of criminal proceeds between 1994 and 1996.

In the Netherlands, where similar regulations were introduced a few years ago, two-thirds of bureaux decided to close rather than register.

* Three quarters of Britons believe the country is right to stand "shoulder to shoulder" with the U.S. following the September 11 terrorist attacks, according to an ICM poll for the BBC.

But the survey, conducted for the Panorama programme, Britain on the Brink, also showed that more than half (56 per cent) believed military action should cease once chief suspect Osama bin Laden was killed or captured.

The findings demonstrated overwhelming, but qualified, support for Tony Blair's stance following the outrages in America.

They also revealed that most people did not perceive the threat to themselves and their family to be any greater since the attacks.

Almost 60 per cent said they believed the risk of being caught up in a terrorist attack was the same as before September 11, while only 32 per cent said it was greater.

Other results from the telephone poll of 1,000 adults, carried out on September 28 and 29, echoed the Prime Minister's opinion that the Muslim community must not be blamed for the attacks. Only 29 per cent of those surveyed said that the hijackings had made people around them more hostile towards Muslims in Britain, while 62 per cent said they had made no difference at all.

Updated: 11:03 Monday, October 01, 2001