Jack Straw has predicted the collapse of the eurozone and urged the UK to consider the "alternatives" as the Greek debt crisis worsens.
The Labour MP and former foreign secretary said the euro was facing a "slow death" and the 17-member eurozone "cannot last" in its current form.
He was speaking as MPs discussed the prospect of a fresh bailout for Greece.
Treasury Minister Mark Hoban said it was in the UK's interest to "ensure the continuing stability" of the eurozone.
However, he insisted the UK would not be participating directly in any bailout and UK exposure to the Greek economy was "relatively small".
The countries which use the single currency have said Greece must agree further austerity measures before receiving £10bn, raising the prospect of the country defaulting on its debts should it be unable to do this.
'Going to collapse'
London Mayor Boris Johnson is among a growing number of UK politicians to call for this to be allowed to happen - and for Greece to leave the eurozone.
Mr Johnson told The Daily Telegraph: "The euro has exacerbated the financial crisis by encouraging some countries to behave as recklessly as the banks themselves.
"We are supposedly engaging in this bail-out system to protect the banks, including our own. But as long as there is the fear of default, as long as the uncertainty continues, confidence will not return across Europe."
Asked in the Commons to respond to an urgent question about the UK government's position in the event of a default, ministers faced a succession of calls from Tory and Labour MPs for Greece to exit the euro.
Jack Straw suggested the eurozone was facing a potentially terminal crisis.
"What the government should do instead of sheltering behind the complacent language, weasel words that 'it is not appropriate, we should not speculate' is recognise that this eurozone cannot last," he said.
"And it is the responsibility of the British government to be open with the British people now about the alternative prospects.
"And since the euro, in its current form, is going to collapse is it not better that this happens quickly rather than a slow death?"
Mr Straw, who was home secretary before becoming foreign secretary between 2001 and 2006, was always seen as one of the more eurosceptic members of Tony Blair's cabinet.
He has become increasingly outspoken on the issue since returning to the back benches after last year's general election.
In the Commons, Conservative MP Anne Main said Greece should be "put out of its misery" and allowed to "depart peacefully" from the eurozone while fellow Tory Bernard Jenkin called for an "orderly departure".
Treasury minister Mark Hoban responded that Greece needed to get its economy "back on track" and that its inability to raise funding from financial markets meant that a further bailout might be required.
'Distress and misery'
However, he stressed that the UK would not be participating "directly" in any rescue - although it could be liable for any further support via the International Monetary Fund.
"The UK only participated in the May 2010 package for Greece through its membership of the IMF.
"So the burden of providing finance to Greece is shared by the IMF and Euro-area member states and we fully expect this to continue. Our position on this is well understood across the euro area."
Asked about the wider impact of Greece defaulting on its debts, he said the Treasury, Bank of England and Financial Services Authority was closely monitoring the financial system but that UK banks had an exposure of just $4bn to Greece - much smaller than either France or Germany.
He said that the UK had a "big interest in ensuring the continuing stability of the eurozone."
But he added: "Clearly this crisis demonstrates the huge strain the eurozone is under - that is why it was right for us to stay out of the eurozone."
The Greek government wants a similar rescue deal to the $110bn bailout it received last year but eurozone financial ministers have postponed the latest £10bn loan from the EU and IMF until further austerity measures are introduced and are awaiting the outcome of a vote by the Greek Parliament on Tuesday.
But former Labour Europe Minister Denis MacShane insisted it was in Britain's self-interest to help prevent it defaulting on its debts and leaving the single currency.
Although he conceded that Greece should "probably not" have joined the euro in the first place, he said the consequences of it leaving now would be severe.
"For a nation to go bankrupt would condemn its people to a long period of distress and misery, which would only create further immigration flows as Greek workers are forced to get on their bikes and seek employment elsewhere," he told BBC News.