Gordon Brown today called for anti-terror measures to be stepped up with sanctions against countries that fail to crack down on terrorist financing.

The Chancellor said that money-laundering was a key element in stopping the financing of terrorist groups, of the type suspected of planning and carrying out Thursday's London bombing.

EU finance ministers, meeting today, agreed to step up the fight against the financing of such groups, he said. The agreement gives new momentum to an EU action plan agreed after last year’s Madrid bombings to seize the assets of terrorist groups and freeze bank accounts.

"Blocking terrorists access to financial systems is a critical preventative measure," Mr Brown told reporters, after chairing the EU finance ministers talks.

"Across Europe we will act as one to send a message to terrorists that, while lives have ended, the cause of justice never dies. Terrorism will always be defeated by democracy."

He said the EU was "prepared to offer help" to other countries that have not yet put in place sophisticated technical systems to stop money laundering.

Mr Brown said he would push to have the topic put at the "top of the agenda" at upcoming World Bank and International Monetary Fund meetings.

Mr Brown had been chairing the first EU ministerial meeting under Britain’s presidency of the European Union. He took the opportunity to urge fellow finance ministers to show solidarity by backing speedier measures to halt the flow of funds propping up terror groups.

"Last week’s appalling attack on London was an affront to everything all democracies in Europe stand for," said Mr Brown. "We stand together, as we did after Madrid. The finance ministers are saying there will be no safe haven for the perpetrators of terrorism and no hiding place for those who finance terror."

Mr Brown pointed out that Britain had already seized £370,000 in 45 bank accounts across the UK as part of the post-Madrid commitment. Other European countries were now doing the same - and today they had vowed to step up the efforts.

The Government is leading Europe-wide moves to create a harsher atmosphere for terrorists to operate in Europe. Tomorrow the Home Secretary will chair an emergency meeting with his European counterparts on co-operation on counter-terrorism operations. Charles Clarke wants to force telephone and internet service firms across Europe to keep records of all private telephone calls, text messages and e-mails so they can be passed on to the police if necessary.

Jack Straw spoke in favour of the policy when he met MEPs in Brussels today. Fears about the costs had been exaggerated, said the Foreign Secretary, but it was a price worth paying to save lives.

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