Danes will discuss the adoption of the euro in a referendum.
Denmark opted out of the European Union's common currency as well as efforts to forge closer cooperation on defense policy and law enforcement in the early 1990s. Voters rejected the euro again in a 2000 referendum.
Prime Minister Anders Fogh Rasmussen, a staunch EU supporter, told a news conference that voters should reassess the exemptions in a referendum, saying "a lot has changed" since they were introduced in 1993.
"It is the right time to take a decision," Fogh Rasmussen said. "We have always said that the Danish exemptions are a hindrance for Denmark."
The euro entered circulation in 12 EU countries in 2002. At the time, Denmark, Britain and Sweden were the only EU members to stay outside.
After the bloc expanded in 2004, Slovenia has adopted the currency, while Cyprus and Malta will start using the euro on Jan 1, 2008.
No date was sent for a plebiscite but it will be held during the next four years, said the prime minister, whose center-right government was re-elected last week.
The referendum - or referendums - will be on whether to drop exemptions that have kept the Scandinavian nation outside various important areas of EU cooperation. It was not immediately clear whether there would be a separate vote for each of the exemptions.
Fogh Rasmussen's announcement came as a surprise. EU policies did not figure in the campaigning leading up to the Nov. 13 election.
EU spokeswoman Pia Ahrenkilde Hansen said the EU's executive office and European Commission President Jose Manuel Barroso had taken note of the decision and added: "It is for Denmark to decide on whether or not to revoke its own opt-outs."
The European Commission has always urged Denmark to hold another referendum on the euro.
Analysts said the prime minister may have sensed that attitudes among euro-skeptic Danes have shifted.
"The government has not moved very much on this issue in the past seven years," said Knud Erik Joergensen, a professor in European integration at the University of Aarhus. "However, Danes have since been traveling abroad and have had the euro in their pockets and realized that it was not so bad after all."
He said scrapping the krone for the euro would be "chiefly symbolic" because Denmark is not able to chart an independent monetary policy from the EU. The Danish central bank's decisions always mirror those taken by the European Central Bank.
Danes stunned fellow EU nations in 1992 by rejecting the Maastricht treaty on closer European cooperation.
A year later, Danish voters approved a revised treaty with clauses keeping the country outside a single currency and banking system, refraining from joining a European defense structure, or conforming to EU citizenship laws and common law enforcement. The citizenship issue has since been dropped by the EU.
Fogh Rasmussen said the referendum would be held after Denmark ratifies the new EU reform treaty, which includes changes in decision-making rules designed to make the union function more effectively. The treaty replaces the failed EU constitution, which was rejected two years ago.
Denmark, a country of 5.4 million people, has held five referendums on EU-related issues since it joined the bloc in 1973.
In the most recent, on Sept. 28, 2000, Danes voted 53.1 percent to 46.9 percent against replacing the Danish krone with the euro. Recent opinion polls have shown a narrow majority of Danes now favor switching to the euro.
Fogh Rasmussen also said he would seek a "noticeable reduction of income taxes" and improved conditions for asylum-seekers in Denmark as he presented the government's platform for the next four years. The prime minister was expected to reshuffle his Cabinet on Friday.
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