Mr Blair said the Labour conference in two weeks' time would be his last as Labour leader - but he did not name a precise date for his departure.

He also apologised for Labour's conduct in recent days, admitting it "has not been our finest hour, to be frank".

Allies have suggested Mr Blair will announce a timetable early in the New Year and hand over power in May.

Mr Blair and his supporters will be hoping his statement will end the civil war that has broken out in the past week among Labour MPs over his departure.

International Development Secretary Hilary Benn said he wished "people would understand what is required" and get on with the business of governing.

But some Labour MPs are already saying Mr Blair's statement will not be enough to quell dissent.

When I met the prime minister yesterday, I said to him - as I've said on many occasions and I repeat today - it is for him to make the decision

Gordon Brown

Analysis: Blair's final gamble In full: Blair statement In full: Brown statement

Manchester Blackley MP Graham Stringer said he did not think Mr Blair's statement "took us any further forward".

And he called on Mr Blair to "fire the starting pistol on a leadership election" at Labour's conference later this month.

Newcastle North MP Doug Henderson, a close ally of Gordon Brown, said: "It doesn't seem to me that the public knows any more about the PM's retirement plans.

"People keep saying to me that the Labour party must have a clear direction forward with clear priorities and a new leader before the May 2007 elections."

BBC Political Editor Nick Robinson said there was still a lot of "poison" emanating from Labour MPs - and allies of Mr Blair and Mr Brown were continuing to fight behind the scenes.

'No precise date'

In his brief statement, made during a visit to a London school, Mr Blair said: "I think what is important now is that we understand that it's the interests of the country that come first and we move on.

I think that Labour has had its moment of madness this week and I hope it will now move on

Peter Mandelson

Political reaction Special report: Blair succession

"I would have preferred to do this in my own way but it has been pretty obvious from what many of my Cabinet colleagues have said earlier in the week.

"The next party conference in a couple of weeks will be my last party conference as party leader, the next TUC conference next week will be my last TUC - probably to the relief of both of us.

"But I am not going to set a precise date now. I don't think that's right. I will do that at a future date and I'll do it in the interests of the country and depending on the circumstances of the time."

He also had a message for warring Labour MPs, saying: "It's the public that comes first and it's the country that matters, and we can't treat the public as irrelevant bystanders in a subject as important as who is their prime minister."

Speaking earlier, Chancellor Gordon Brown said it was for Mr Blair to decide when he quit.

"When I met the prime minister yesterday, I said to him - as I've said on many occasions and I repeat today - it is for him to make the decision," he told reporters during a visit to a Glasgow athletics track.

Mandelson reaction

Giving his reaction, EU trade commissioner and key Blair ally Peter Mandelson said: "I think that Labour has had its moment of madness this week and I hope it will now move on and that the plotting and the shenanigans will be put behind them once and for all.

KEY LABOUR DATES 25-26 Sept: Mr Blair and Mr Brown make speeches at the Labour Party conference in Manchester 15 Nov: State opening of Parliament including the Queen's speech outlining the government's agenda 2 May 2007: Tenth anniversary of Mr Blair's election as prime minister 3 May 2007: Elections for Scottish and Welsh assemblies, and most local authorities in England

"They've got to concentrate on the needs of the country, not themselves."

He said he always thought Mr Blair would step down after 10 years in office, as "it was as much as someone could do that job for".

Speaking earlier, Commons leader Jack Straw said he would expect Mr Blair to stay "to the halfway point of a normal four-year parliament", which would be May.

But Downing Street rejected suggestions a deal had been struck to hand over power on 4 May, three days after Mr Blair notches up 10 years in power and the day after the local elections.

HAVE YOUR SAY Just resign Tony and call an election

Edward Dowty, Kings Lynn, UK

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Mr Blair has been under pressure to quit earlier than May in order to get a new leader in place before the elections in England, Scotland and Wales - which are expected to be disastrous for Labour.

Mr Brown - the man most likely to succeed Mr Blair - was also thought to be unhappy at the prospect of taking over at the end of a Parliamentary session.

The two men were reported to have to have had an acrimonious meeting over the issue on Wednesday morning.

It was followed by a day of open warfare between supporters of the chancellor and Mr Blair - and a string of government resignations - over when the prime minister should quit.