Amid tributes from the rival who is almost certain to take over, and tearful applause from his constituents, Blair said he would stand down as leader of the Labour Party and prime minister from June 27.

Blair used his speech to launch a powerful defence of his record, including supporting US President George W. Bush after the September 11, 2001 attacks and the 2003 war in Iraq.

"I did what I thought was right," he said, adding: "It has been an honour to serve it (Britain). I thank the British people for the times that it went right. And I apologise for the times I have fallen short."

Blair said he had taken over a country "uncertain of its future, uncertain about the future," but insisted his government had achieved more than any other in Britain since the end of the World War II in 1945 because of the improved economy.

"I have been prime minister of this country for just over 10 years. In this job, in the world today, I think that is long enough for me ... Sometimes the only way you conquer the pull of power is to set it down."

"On 27th June, I will tender my resignation from the office of prime minister."

Finance minister Gordon Brown, the frontrunner to replace Blair despite their rivalry, hailed the prime minister's "unique leadership" at a cabinet meeting in London before Blair flew off to Trimdon in northeast England to make his announcement, a spokesman said.

"There was much thumping of the table," said the spokesman.

"Gordon paid a very full tribute to Tony in there," added Northern Ireland Secretary Peter Hain.

Blair, 54, will stand down after 10 years in power which started with the handover of Hong Kong to China on July 1, 1997 and guiding the royal family and the nation through the trauma of the death of Princess Diana.

He also presided over a booming British economy but for many his legacy risks being clouded by the 2003 invasion of Iraq. His premiership started amid euphoria but is ending with his popularity at record lows.

Blair won three general elections and originally promised to serve a full third term of office, which would have kept him in office to 2010, but not fight for a fourth, straight term of office.

But after a mini "coup" by some Labour lawmakers last September, allegedly orchestrated by Brown, Blair was forced to say he would step down by September this year.

Brown, 56, who shared an office with Blair when they were first elected to parliament in 1983 and who jointly reformed Labour, is a virtual certainty to become his successor.

Senior cabinet-level colleagues, including Home Secretary John Reid and the much-fancied Environment Secretary David Miliband, have ruled out standing, leaving only two token challengers from the left wing of the party.

Under the British system, the leader of the biggest party in parliament automatically becomes prime minister.

Blair is expected to endorse Brown publicly as his successor for the first time, although observers believe he could delay this until Friday.

The pair's relationship has soured over the years, particularly over Brown's perception that Blair repeatedly reneged on a 1994 deal to hand over the reins of power to him after two terms of office.

Blair will remain in office as Labour leader and prime minister as well as a lawmaker during the campaign to succeed him.

He is due at the Group of Eight meeting in Germany and the European leaders summit in June and is expected to travel widely, including to France, the United States and Africa.

Speculation is mounting as to his future plans, which could include a possible international role such as president of the European Union, or making money on the lucrative lecture circuit, or simply writing his memoirs.

Blair's agent confirmed that Blair will stay on as a member of parliament, unless he is offered a "mammoth" international job after his resignation.

"He's not going to leave to go swanning around the United States doing lecture tours and things. That will come later," John Burton told reporters outside Trimdon Labour club.

Former Labour leader Neil Kinnock paid tribute to Blair as he prepared to make his announcement.

"The one word that has to be associated with Tony is 'winner'," he told BBC radio.