Confessing that few occasions in his 30-year parliamentary career had given him such pleasure, the Secretary of State for Scotland said: "This is a challenge to the concept that the man from Westminster necessarily knows best."
Together with plans for a Welsh assembly, a London authority and regional development agencies, sweeping reforms to the Scottish political system would help to regenerate the United Kingdom, ministers argued.
Announcing an 11 September referendum on a Scottish parliament with the power to raise pounds 450m per year in tax, Mr Dewar told the Commons that the time had come to build a modern constitution.
If the Scottish people vote "yes" to both the Edinburgh parliament and to tax-raising powers, they will have their own assembly for the first time since the Act of Union in 1707. And in a surprise announcement yesterday, Mr Dewar confirmed that the 72 existing Westminster seats could be reduced after the removal of a legal bar to such a move.
Sovereignty will remain in Westminster, and although the new parliament will be free to debate independence, it will not have the power to break away without consent from London. The body will be led by a First Minister, appointed by the Queen.
But despite celebrations in the Labour ranks, the Conservative constitutional spokesman, Michael Ancram, said yesterday was a "sombre" day for Scotland, and forecast that it would lead to the break-up of the United Kingdom. The document was "dangerous, damaging and dishonest," he said.
"We will certainly be asking the people of Scotland to look carefully into the dark, cold night which this statement ... opens before them - and we will ask them to draw back before it is too late," he added.
Other parties welcomed the White Paper, entitled Scotland's Parliament. Alex Salmond, the leader of the Scottish National Party, said he believed there was no "glass ceiling" to prevent a devolved assembly from moving on to full independence. His party had long supported devolution while holding full independence as its ultimate aim.
For the Liberal Democrats, Jim Wallace welcomed the White Paper and said it presented the opportunity to create a powerful and effective Scottish Parliament.
"It terms of proportional representation, clear signals can be given to people in Scotland who were sceptical in 1979 that this Parliament will be a Parliament for the whole of Scotland and not just for one party from one part of it," he said.
In contrast to Tuesday's announcement on Welsh devolution, there was little opposition from Labour MPs. Even Tam Dalyell, a long-term opponent, restricted himself to asking a question about costs.
The key points
The new parliament will be responsible for health, education, local government, economic development, home affairs, the environment, agriculture, sport and the arts.
Westminster will retain control of foreign policy, defence, national security, the monetary system, employment legislation, social security and transport regulations.
Voters in Scotland will be asked if they want the parliament to have the power to raise three pence in the pound above the basic rate of tax.
The body will have 129 members.
Elections will take place during the first half of 1999, and the parliament will officially open on 1 January 2000.Reuse content