Tony Blair announced yesterday he would step down on June 27 after a decade as prime minister, and told Britons, disillusioned by the war in Iraq, that he had always done what he believed was right.

Mr Blair's popularity has suffered since he sent British forces to join the 2003 US-led invasion of Iraq. A Labour Party rebellion in September forced him to say he would quit within a year, opening the way for Gordon Brown to take over.

"Hand on heart, I did what I thought was right," Mr Blair told Labour Party members in his constituency in northern England. "I may have been wrong, that's your call. But believe one thing, if nothing else: I did what I thought was right for our country."

Mr Blair's resignation triggers a contest to lead the Labour Party that finance minister Brown is favourite to win. Labour said its new leader and deputy would be announced on June 24.

The new party leader would become prime minister after the departure of Mr Blair, the only person in a century besides Margaret Thatcher to have held the post for 10 years.

"I think that's long enough, not only for me, but also for the country, and sometimes the only way you conquer the pull of power is to set it down," Mr Blair said.

Mr Blair will be remembered for helping bring peace to Northern Ireland after decades of violence, winning three straight elections for Labour for the first time, and dragging it away from its left-wing roots to the centre of British politics. An opinion poll published by the Guardian newspaper yesterday showed 60 per cent of voters believed Blair would be remembered as a force for change, though not always good. The ICM poll said 44 per cent believed he had been good for Britain.

"I came into office with high hopes for Britain's future and you know I leave it with even higher hopes for Britain's future," he said. "This is a country that can today be excited by the opportunities, not constantly fretful of the dangers."

Mr Blair had long been expected to hand over power to let another Labour leader guide the party into the next national election - due in May 2010 at the latest.

Mr Brown, whose official residence is next door to Mr Blair's in London's Downing Street, has waited with increasing impatience for his neighbour to leave. Critics say their rivalry, often bitter, has diluted the government's effectiveness.

But Mr Brown paid tribute to Mr Blair yesterday, calling his achievements "unique, unprecedented and enduring".

Mr Blair has been tainted by a party funding corruption scandal in which he became the first serving prime minister to be quizzed by police, as a witness, in a criminal investigation. Mr Blair and Mr Brown were the twin architects of Labour's rise to power in 1997 after 18 years in the political wilderness. Under Mr Blair, Britain's economy has enjoyed an era of growth, high employment and low interest rates.

International reaction

US - President George W. Bush:
"I will miss Tony Blair. He is a political figure who is capable of thinking over the horizon. He's a long-term thinker. I have found him to be a man who's kept his word which is sometimes rare in the political circles I run in. "When Tony Blair tells you something, as we say in Texas, you can take it to the bank."

President of the European Commission, Jose Manuel Barroso:
"Tony Blair has taken Britain from the fringes to the mainstream of the European Union. "He has done this by engagement, not by vetoes."

Iraq - Government spokesman Ali al-Dabbagh:
"Tony Blair has helped in toppling Saddam Hussein. He stood courageously next to President George Bush to end the misery of the Iraqi people. He will be mentioned in Iraq's history as such. But at the same time we think that the relation between Iraqi people and the British forces could have been better and we could have avoided lots of problems."

Ireland - Prime Minister Bertie Ahern:
"Tony Blair leaves office with an honoured place in our history assured. Tony Blair leaves a priceless legacy of peace and agreement in Ireland. Our two governments forged an unprecedented partnership that made a real difference and achieved a transformation in the relationship between Britain and Ireland."

Northern Ireland - First Minister Ian Paisley:
"There were many issues on which we did not see eye to eye and indeed he kept me out of Downing Street for several years. Also unionists do not forget his failure to live up to promises in the early years. They believe he was too willing to offer concessions to republicans, which may have delayed the progress that has been achieved recently."

Gerry Adams, Sinn Fein President:
"Tony Blair has made a significant and crucial contribution to the Irish peace process. The Good Friday Agreement and the restoration of the political institutions would not have been possible without him."

Japan - Prime Minister Shinzo Abe:
"Over 10 years, he achieved many things. He dealt with economic growth and also education reform, and had strong support from the British people."

Denmark - Prime Minister Anders Fogh Rasmussen:
"Britain has been under Tony Blair's leadership one of Denmark's closest international partners... working together in the EU or in international operations in the Balkans, Iraq and Afghanistan."

Hungary - Socialist Prime Minister Ferenc Gyurcsany:
"He greatly contributed to the transformation of Britain, that Britain today is again competitive, a country with a significant influence, and at the same time he left an indelible mark on the British left."

Netherlands - Prime Minister Jan Peter Balkenende:
"With Tony Blair's departure, a prominent leader disappears from the European and world stage. During tense moments, Blair was the binding force. Blair did not shrink from rowing against the current if he thought it was necessary."