Britain's Blair bows out after 10 years

TRIMDON, England, May 10 (Reuters) Tony Blair announced today 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.

Blair's popularity has suffered since he sent British forces to join the 2003 U.S.-led invasion of Iraq and a Labour Party rebellion in September forced him to say he would quit within a year.

''Hand on heart, I did what I thought was right,'' 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.'' Blair's resignation triggers a contest to lead the Labour Party which finance minister Gordon Brown is favourite to win.

Brown would become prime minister after the departure of Blair who is only the second person in a century 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,'' Blair said.

He 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 from its left-wing roots to the centre of British politics.

''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.'' An opinion poll published by the Guardian newspaper today 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.

BROWN'S CHALLENGE Blair had long been expected to hand over power before the end of his third term to let another Labour leader guide the party into the next national election due by May 2010.

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

Blair has been tainted by a corruption scandal in which he became the first serving prime minister to be quizzed by police in a criminal probe.

Detectives twice questioned Blair as a witness in their investigation into a political party funding scandal.

Blair and Brown were the twin architects of Labour's rise to power in 1997 after 18 years in the political wilderness.

Under Blair, Britain's economy has enjoyed the strongest era of growth for three centuries, high employment and low interest rates. But Brown will take over as interest rates hit a six-year high today and are set to rise again.

Brown's chief challenge will be to revive support for Labour and overtake the opposition Conservatives in the opinion polls.

Conservative leader David Cameron, 40, has revitalised the party of Margaret Thatcher - the only prime minister to hold power longer than Blair in the past century - since he became leader in 2005. Polls suggest he could win a slim majority in parliament in a national election.

REUTERS DS RAI1912