THE campaign to keep Britain in the EU is facing a tougher challenge after the Government confirmed 1.5million residents, who were widely expected to support UK membership, will be excluded from the referendum.

In a significant concession to the Eurosceptics in his party, David Cameron plans to adopt the electoral roll used in Westminster elections, rather than local government or European polls, for the proposed in/out EU referendum.

The decision means almost 1.5million EU nationals resident in Britain will not be able to cast a vote.

A Bill paving the way for the referendum will be announced during the Queens Speech on Wednesday and presented to Parliament a day later, as the Prime Minister embarks on an extensive tour of European capitals to lobby for a series of reforms.

According to reports yesterday, the Prime Minister intends to hold the referendum in 2017.

In their election manifesto, the Conservatives promised a vote by the end of that year but there has been growing speculation he might set a date next year.

In a separate development yesterday, Labour said it would back the referendum, after opposing it during the election campaign.

Confirming the U-turn on the BBC Andrew Marr programme, acting leader Harriet Harman said there was no public appetite for Labour to fight against a referendum "that appears inevitably going to happen".

The SNP will seek to amend the Bill to give the Scottish Government a veto over Britain's withdrawal from the EU if a majority of Scots vote to stay in.

The Nationalists will also call for 16- and 17-year-olds to be given the vote.

Westminster leader Angus Robertson said: "I don't agree with having a referendum on EU membership but if it is to go ahead, then Cameron has a responsibility to help ensure it can be an enriching and open debate.

"Young people are our future. It is their UK - and their Europe - so they must have their say."

According to a YouGov poll yesterday 68 per cent of Scots would vote for Britain to remain in the EU, compared with 32 per cent who would vote to leave.

Confirming the narrower Westminster franchise was to be used, a Downing Street source said: "No Brit under the age of 58 has had their say on the UK's membership of the European Union.

"It is time to put this right and to give people the choice - in or out.

"This s a big decision for our country, one that is about the future of the United Kingdom.

"That's why we think it's important that it is British, Irish and Commonwealth citizens that are the ones who get to decide."

Members of the House of the Lords and Commonwealth citizens in Gibraltar will be given a vote, in addition to those on the Westminster voters' roll.

Those entitled to vote in UK elections

include British, Irish and Commonwealth citizens over 18 who are resident in the UK, plus UK nationals resident overseas for less than 15 years.

Local council, European Parliament and Scottish Parliament elections use a broader franchise which includes resident EU nationals.

Last year's independence referendum was based on the Scottish Parliament franchise, meaning 60,000 EU nationals living in Scotland were entitled to vote.

Mr Cameron's decision marks a victory for Tory Eurosceptics, who had feared the wider franchise would be used.

Most EU nationals in Britain are thought to support the country's continued membership and their votes could prove decisive in a close contest.

The Government's decision may yet face a challenge in the Lords from Lib Dem, Labour and pro-EU Tory peers keen to tip the odds in favour of an 'In' vote.

David Cameron will embark on a European charm offensive immediately after the Queen's Speech when he will seek support for his bid to renegotiate the terms of Britain's EU membership.

He wants powers to stop EU migrants claiming benefits for four years and an opt from moves towards closer political union between the 28 member states.

He is due to fly to Denmark on Wednesday evening for a working breakfast on Thursday morning with Prime Minister Helle Thorning-Schmidt.

He will then travel the Netherlands for discussions with Prime Minister Mark Rutte before ending the day with bilateral talks with President Francois Hollande over dinner at the Elysee.

On Friday, the Prime Minister will meet Prime Minister Ewa Kopacz in Warsaw before concluding his trip with talks with German Chancellor Angela Merkel in Berlin.

Mr Cameron hopes to talk to all EU leaders individually before a European Council meeting at the end of next month.

He is due to host the President of the European Commission, Jean-Claude Juncker, for a working dinner at Chequers today.