Blair: I was wrong to reveal my retirement plan

Tony Blair has admitted his decision to "pre-announce" his retirement before last year's election may have been a mistake.

His remarks will be seen as a sign that he acknowledges that his political capital is running out and acknowledges he will not serve for the "full" third term as he hoped when he announced in October 2004 he would not fight a fourth election as Labour leader.

The Prime Minister is believed have a departure date in his mind but is keeping his cards close to his chest.

Mr Blair told ABC Radio in Australia: "I think what happens when you get into your third term and you are coming up to your tenth year is that it really doesn't matter what you say, you are going to get people saying it should be time for a change. This speculation, I think, probably would happen whatever decision you take. Now, it was an unusual thing for me to say but people kept asking me the question so I decided to answer it. Maybe that was a mistake."

Downing Street aides said later that Mr Blair meant it was a mistake to think he could stop media speculation about when he would stand down by answering the questions ­ and not that it was a mistake to announce his intention to leave. Officials said there was some confusion over his remarks, broadcast early today, because he was interrupted at a critical moment.

Some close allies urged Mr Blair in 2004 not to go public with his plans, warning he would be seen as a lame-duck leader in his final term. But the Prime Minister, who had studied closely the problems that afflicted Margaret Thatcher in her third term, felt his announcement would prevent Labour's election campaign last year being dogged by questions about whether he would "go on and on."

He also wanted to allay Gordon Brown's fears that he might run for a fourth term at a time of great tension between them.

Yesterday John Prescott, the Deputy Prime Minister, said he supported Mr Blair's decision. "I thought it would be [better] announcing then [so] you could get on with a peaceful transference of power," he told BBC TV's The Politics Show.

Mr Blair, who watched the close of the Commonwealth Games in Melbourne with his wife Cherie and met British athletes, returned to business today by making another defence of his strategy in Iraq and Afghanistan.

In the second of three keynote speeches on foreign affairs, Mr Blair told the Australian Parliament in Canberra: "If the going is tough, we tough it out. This is not a time to walk away but to have the courage to see it through."

He stressed the importance of "global alliances for global values" in an "interconnected" world in which foreign policy stretches across continents like economics or communications. The Prime Minister said: "To win we have to win the battle of ideas as much as arms, we have to say these are not Western, still less American or Anglo-Saxon values, but values in the common ownership of humanity, universal values that should be the right of the global citizen ... Ranged against [this] are the people who hate us, but beyond them are many more who don't hate us but question our motives, our good faith, our even-handedness, who could support our values but believe we support them selectively."