Tony Blair finally confirmed today that he will leave Downing Street within the next 12 months, earning himself a breathing space in the face of calls from his own party to hand over power sooner rather than later.

The Prime Minister made his announcement at a school in St John's Wood, north-west London, the day after eight members of the Government resigned in a coordinated protest at his refusal to name the date for his departure.

Mr Blair confirmed that the Labour conference starting in Manchester on September 24 would be his last as leader, but refused to give any more detail on his departure date.

Instead, he started off by apologising to the British public for the divisions shown by Labour over the past week and said that they should not be treated as "irrelevant bystanders".

"I am not going to say a precise date now, I don't think that is right," he added. "I will do that at a future date and I will do it in the interest of the country and depending on the circumstances at the time."

The Prime Minister's declaration failed to dampen speculation that a private deal has been struck between him and Gordon Brown, his long-time rival and heir apparent, although both sides denied that.

Government whips trying to head off a wider rebellion were briefing MPs today to suggest that Mr Blair might announce his departure on May 4, three days after celebrating his tenth anniversary at No 10. That would trigger a six-week leadership contest that would see his successor take over on June 15.

Although Mr Brown had pushed for an earlier departure date - many party members are worried that Labour face a rebuff from the voters in Scottish and Welsh parliamentary elections and English council elections on May 3 - he appears to have accepted Mr Blair's offer.

Philp Webster, Political Editor of The Times whose interview with Mr Blair last week sparked the latest crisis, said that no deal had been made and the pressure had been lifted for a few months at least.

"If the polls continue to be bad for the Government, if they're heading for a wipeout in the Scottish and Welsh elections, then he may go earlier," Webster said, "He said that he will decide what will happen in the interests of the country and the party, but I don't think there much chance of it happening soon.

About an hour before Mr Blair spoke, the Chancellor finally broke his silence on the leadership crisis. Speaking in Glasgow at the inaugural UK School Games, an ebullient Mr Brown said that the decision on when to go was Mr Blair's alone to take.

"I will support him in the decision he makes," he said. "This cannot and should not be about private arrangements, but what is in the best interests of our party and, most of all, the best interests of our country."

The leadership crisis was sparked by Mr Blair's refusal in a Times interview last week to give any more details about his retirement - except to suggest that he was in no rush to move on. That angered one group of formerly loyal MPs from the 2001 intake, 17 of whom signed a letter calling on him to resign sooner rather than later.

Eight of those, all junior members of the Government, resigned in a co-ordinated protest yesterday despite the leaking from Downing Street of a departure timetable under which Mr Blair would have remained Prime Minister until the summer recess starts on July 26.

But Mr Blair and his advisers were even more concerned about a second rebellion brewing among a group of 100 MPs, representing a broad cross-section of the party, who were threatening to trigger a leadership election unless he made his plans clear.

Today's announcement by Mr Blair was aimed primarily at calming them down - although reaction to it was mixed.

Chris Bryant, the organiser of the letter two days ago signed by 15 Labour MPs calling for Mr Blair’s resignation, said that he was encouraged by both the Prime Minister's and the Chancellor's speeches. "I hope we can get on with an open and transparent process of appointing our new leader sooner rather than later," he added.

Graham Stringer, MP for Manchester Blackley, protested that Mr Blair's statement "doesn’t take us any further".

"I don’t believe by leaving the date up in the air it is going to stop the kind of debate and discussion that’s been going on," he told Sky News

"Only the Prime Minister announcing that he is going very quickly and then commencing a leadership election is really going to take the pain out of this very difficult situation."

He added: "Politicians aren’t going to start behaving as though they are Mother Teresa. We all want to win the next election and believe we have arguments about how to do that. You can’t put politics on hold, which is what the Prime Minister is trying to do by saying he won’t tell us when he is going."

But Sir Stuart Bell, a veteran backbencher and Blair loyalist, said that there was a "sense of relief" in the party after Mr Blair's pledge.

He added: "I think the Labour Party had a nervous breakdown in public this week and that’s why the Prime Minister apologised to the country. I think those who signed the letter saying he ought to resign ought to feel very ashamed of themselves because they haven’t changed the situation."

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