The Prime Minister will still recommend party supporters, including former Labour MPs, for peerages to boost Labour's strength in the House of Lords.
But Downing Street last night confirmed that for the first time in 18 years, the Queen's Birthday Honours List to be published shortly will contain no political honours, from either Labour or the Tories.
"We will not be making nominations for political services. It would be extremely odd if in these circumstances future Honours Lists included lots of political appointees from the Tories," said a Downing Street source.
Tory leaders were informally advised not to submit names for political honours in next month's list. John Major can make amends to his friends in his own Resignation Honours List, which is being delayed until July to avoid it becoming entangled in the Tory leadership contest.
Baroness Thatcher and Mr Major rewarded ministers they had sacked with knighthoods in recognition of their service in office - and their continuing loyalty on the backbenches. Other "knights of the shires" often received knighthoods as compensation for not gaining ministerial office.
Both Tory prime ministers also rewarded party workers with lesser honours such as MBEs. There were knighthoods and peerages for top British businessmen who were also substantial donors to party funds, although there was no evidence of honours for sale.
Mr Blair is reinstating a policy adopted by Harold Wilson and James Callaghan. Sir Edward Heath reversed Wilson's ban on political "gongs," which was reinstated when Wilson returned to power in 1974 and remained until Margaret Thatcher came to power.
Mr Major opened the honours system to suggestions from members of the public, but continued the Tory tradition of political awards.
It is expected that he will resist offering peerages to former Cabinet ministers who lost their seats, such as Michael Portillo, Malcolm Rifkind, Ian Lang, Michael Forsyth and Tony Newton, to allow them to re-enter the Commons, if they choose to fight a Parliamentary seat again.
Some former ministers were dismayed on election night to see so many senior Tories losing their seats, in the knowledge that the queue for peerages had lengthened overnight. "I've no chance of getting a peerage now," said one ex-minister.
Mr Major is expected to produce a list in line with those by his predecessors, in spite of the heavy Tory losses.