Tony Blair tonight wound up his one day London conference on the Middle East, saying it had set out a blueprint for building a future Palestinian state.

The Prime Minister claimed the agreements reached would help to draw the "poison" from international relations, and bring closer a peace settlement with Israel.

Flanked by Mahmoud Abbas, the Palestinian President, Mr Blair said that the agreements reached covered governance, economic support and security in a new state.

The EU would help to set up the new political institutions, the US would help co-ordinate security, while the World Bank would play a crucial role in economic development.

Mr Blair said he believed that the international community had laid the "foundation stones" for a future Palestinian state.

He told the closing press conference at the Queen Elizabeth II conference centre in Westminster: "What we have today is an agreement, not just on behalf of the Palestinian Authority that has got to usher in such a state, but on behalf of the whole of the international community as to the practical steps, the foundation stones, necessary to create that viable state in the future.

"Without those foundation stones it simply will not happen."

Mr Blair argued that success in building a Palestinian state would have implications for the wider region, and the world. He continued: "I have described this as the most pressing political challenge for this reason: right around the world, in Britain, in Europe, elsewhere, not just in Israel, in the Palestinian territory, in the Middle East, but right around the world, this is the issue that causes as much misunderstanding, division, concern, worry, as virtually any other in the whole of the international community.

"And if we are able to make progress on it, that is relevant and of interest of course primarily to the Palestinian people, to the Israeli people. It is also a major part of ensuring the security and stability of countries like Britain, of the EU, of the whole of the rest of the world.

"Much of the poison that we want to take out of international relations has swirled around as a result of the failure to make progress on this issue."

Mr Blair said he believed today’s conference, which was attended by US Secretary of State Condoleezza Rice among many other high-powered figures, would help to progress the peace process.

"For the past few years, on occasions, times have seemed very dark indeed. I think we can see some light, we don’t overstate it, we don’t become complacent about progress towards it," he said.

"But I think today’s conference hopefully is one step, but a significant one, to achieving the goal ... that we all want to see, which is an Israel confident in its security living side by side in peace with an independent, viable Palestinian state. I hope we can achieve it."

Mr Abbas said the conference had been "very positive and fruitful". He said it was reassuring to know that Palestine was not alone and the international community shared its concerns.

Mr Abbas said: "We used to believe that we were alone in the region. However, other countries are interested as well. We are confident that the international community is interested in this cause."

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