British Prime Minister Tony Blair waves to supporters outside the local Labour club in Trimdon, England, today after announcing his resignation as leader of the Labour Party. Blair's resignation will open the way for a leadership contest that is expected to be won by present Chancellor of the Exchequer Gordon Brown. KIRSTY WIGGLESWORTH | Associated Press

In a somber farewell, Blair made way for Treasury chief Gordon Brown to take the top post. The British leader looked overcome with emotion, struggling to retain his trademark broad grin as loud cheers rang out.

"Hand on heart, I did what I thought was right," Blair told party workers and supporters at Trimdon Labour Club in his Sedgefield constituency in northern England. "I may have been wrong, but that's your call. But believe one thing if nothing else. I did what I thought was right for our country."

Following the Sept. 11, 2001, terrorist attacks in the United States, it was right, Blair said, to "stand shoulder to shoulder with our oldest ally, and I did so out of belief."

Brown, Blair's dour partner in reforming the Labour Party and a sometimes impatient rival in government, was expected to easily win election as the party's new leader and become the next prime minister. Brown has never criticized Blair's decision to go to war in Iraq and has given no indication on how he will steer Britain's role in the conflict.

BRITAIN'S POSSIBLE NEW SUCCESSOR

Blair, 54, has stopped just short of openly endorsing Brown, a stern Scot who lacks his charisma and common touch.

The two men stuck together during the 2005 election campaign, at one point famously facing the cameras and eating ice cream. The camaraderie sometimes seemed forced, though they rarely disagreed in public on the issues.

On one occasion as he sat beside Blair during that campaign, Brown was asked whether he would have done the same as the prime minister over Iraq. There was a long pause before Brown said: "Yes."

The government has declared its hopes of withdrawing from front-line operations this year — a move certain to please a public anxious to see an end to the conflict.

In London, Laura Phillips, 21, a banker, reflected the anti-war mood.

"I'll fight for him if he gets our troops out of Iraq," she said.

Blair embraced dozens of local Labour activists as he arrived to greet around 250 supporters packed into the former mining village's Labour clubhouse. Some chanted "four more years," but were chided by the leader as he began his speech.

"That's not on message for today," Blair joked.

YOUNGEST PRIME MINISTER OF THE 20TH CENTURY

For his long-expected announcement, Blair returned to the district where he won election to Parliament in 1983, and where he announced in 1994 that he was a candidate for Labour Party leader.

Blair's announcement came days after he celebrated the 10th anniversary of Labour's landslide election victory of May 1, 1997.

Since then, he has been one of the most praised, and reviled, leaders in British history — the man who transformed the Labour Party, helped end Northern Ireland's troubles but angered many of his supporters by committing Britain to a bloody, unpopular war in Iraq.

When he was elected at 43 in 1997, Blair was the youngest prime minister of the 20th century — the first born after World War II and the only one to have played in a college rock band, Ugly Rumours. He transformed Labour from an old-style social-democratic party to centrist "New Labour" and led it to three consecutive election victories.

Under the stewardship of Blair and Brown, the British economy has thrived. London rivals New York as the world's pre-eminent financial center, GDP is up, unemployment is down and interest rates are low, though rising. However, Blair's promised health and education reforms remain incomplete, and soaring house prices and increasing personal debt threaten to widen the divide between haves and have-nots.

Nonetheless, his supporters say Blair will be remembered for helping the poor.

"It's a nostalgic day but we're here to celebrate of all of Tony Blair's achievements, he's done so much to help the people of this country, and so much to lift people out of poverty," said Maureen Lenehan, an official at the Trimdon Labour Club.

Blair announced his departure date two days after the formation of Northern Ireland's full power-sharing administration, a goal he spent much of his premiership striving to achieve.

A LEGACY DOMINATED BY DECISIONS ON IRAQ

But despite his accomplishments, Blair's legacy looks to be dominated by Iraq.

His decision to stand should-to-shoulder with President Bush by committing troops for the invasion divided his party and the country. Blair said he was content for history to judge him, but four years on and with almost 150 British troops dead in Iraq, the war is more unpopular than ever.

White House spokesman Tony Snow called Blair "an extraordinary leader of the United Kingdom."

"He and the president are strong friends and allies but also the prime minister has demonstrated the ability to work with presidents of both parties and to maintain a long tradition of an alliance that is of extraordinary strategic importance. And we certainly appreciate everything he has done." Snow said.

In Iraq, those critical of the 2003 invasion welcomed Blair's impending departure.

"We hope that Bush will follow," said Ali Kredi, 55, a retired Sunni resident of Baghdad. "Bush has lost a staunch ally and this might add more pressure on him to withdraw from Iraq."

But in southern Basra, where British soldiers have been based since 2003, some worried the city will fall into chaos when Britain reduces its troop presence.

"Blair's resignation will have a negative effect on Iraq," said Karim Abdullah, a 45-year-old engineer. "Iraqis will lose an important politician who was supportive of the Iraqi people, especially in Basra, where the British army gave a good example of cooperation with the locals."

Former President Clinton said he was grateful for Blair's service.

"Blair revitalized his party, modernized his country's economy and its approach to social problems, took the lead on global issues from climate change to debt relief to doubling aid to Africa, to the quest for peace in Northern Ireland and Kosovo, and started the global Third Way political movement," Clinton said.

Blair's last months in office also have been overshadowed by a police investigation into claims that his party and the opposition traded political honors for cash. Senior Blair aide Ruth Turner, Blair's chief fundraiser Lord Levy and two others have been arrested during the police inquiry into claims that seats in the House of Lords and other honors were awarded in exchange for party donations. Prosecutors are considering whether anyone should be charged.

Blair was questioned twice by police as a witness, but is not considered a suspect.

In recent months, Blair's thoughts have turned to the lessons of his decade in power.

"When I first started in politics, I wanted to please everyone," Blair said during a tour of the Middle East in December. "After a time I learned that you can't please everyone, and you learn that the best thing is to do what you think is right and everyone can make their judgment."