Tony Blair admitted that the problem of organised crime was "greater than ever before" and said the Serious Organised Crime Agency (Soca) was the 21st century solution to dealing with it.
The agency will make tackling the illegal drugs trade and human trafficking its top priorities as its 4,000-strong staff try to drive down the organised criminality that is estimated to cost every man, woman and child at least £300 a year.
"There is a class of highly entrepreneurial international criminals who have turned their ingenuity to malign effect," Mr Blair said.
"We are not dealing with shambling amateurs. It is a global business, its captains are practical and we have to be equally tough, intelligent, broad-ranging and rigorous in return."
The social and economic costs of the class A drugs trade alone is £13 billion a year, the Prime Minister said. Immigration crime costs a further £1 billion.
Mr Blair said it was "imperative" that the Government acted to end the damage organised criminal networks were doing to the fabric of communities.
"The victims have to be paramount," Mr Blair told a meeting of the agency's new bosses and stakeholders at Downing Street today.
He said organised criminality impinged on people's right to free passage, their right to property and, in the worst cases, even their right to their own bodies.
"These are the freedoms we are concerned to defend," the Prime Minister said.
Soca will incorporate the old National Crime Squads and National Criminal Intelligence Service, and will incorporate functions of the immigration and customs agencies.
Another of its priorities will be to tackle fraud, identity theft, and e-crime, which costs the country's economy around £2 billion a year.
Mr Blair said Britain could no longer fight 21st century criminals with early 20th century methods.
"The old methods of the way we try to police and investigate and use intelligence are not going to work when confronted with highly efficient criminal gangs," he said.
The launch of Soca marked the start of a more sophisticated and integrated approach to tackling organised crime, the Prime Minister said, as he outlined a series of new methods and powers for dealing with Britain's Mr Bigs.
These included new regulations to allow criminals to turn Queen's evidence and secure more lenient sentences or immunity from prosecution in return for informing on their crime bosses.
Financial reporting orders which require criminals to disclose all the details about their financial dealings and disclosure notices which could compel them to cooperate with the law enforcement agencies will also be introduced.
Soca officers will be the first in the country to combine the powers of police, immigration and customs officers to ensure the agency is as flexible and dynamic as possible.
Mr Blair said the aim was to make life as difficult as possible for organised criminal gangs and he vowed to introduce even tougher powers if necessary.
"If we find we need to go further, we will go further," he pledged. "There is nothing that should come before the basic liberty of the people in this country to be free from the tyranny of this kind of organised crime. "
Mr Blair and Mr Clarke later inspected a Porsche and a BMW confiscated under the Proceeds of Crime Act at a photocall in Wellington Barracks in central London to mark the launch of the agency.
The boots of the cars - confiscated by Leicester police - were stuffed with confiscated jewellery, faked passports and a range of confiscated guns, including revolvers, self-loading and fully automatic pistols.
The Home Secretary and the Prime Minister were accompanied by Bill Hughes, director general of Soca.
They held a private meeting with officials from the Poppy Project, a Home Office-funded initiative providing accommodation and specialist advice and support to women trafficked into prostitution in Britain.
They met a Moldovan woman victim of human trafficking who successfully gave evidence against her traffickers at a trial in 2004.
Mr Clarke said: "I am today sending the organised criminal underworld a clear message: Be afraid.
"Soca marks a step change in our efforts to stay ahead of the game in the fight against organised crime.
"Drugs and people trafficking will be its top priority along with fraud and identity theft.
"Organised crime is a massive and growing problem affecting every neighbourhood in the UK.
"It creates huge misery for decent people, damaging our communities to the tune of over £20 billion in criminal profits."
Soca is chaired by ex-spy master Sir Stephen Lander, former head of MI5. Its director general is Bill Hughes, who used to head the National Crime Squad.
It will have 4,300 staff, including 120 officers based in 40 countries around the world.
One of its first tasks will be to build up a more comprehensive intelligence picture about the organised criminal networks operating in the UK.
Mr Hughes admitted "we are not as aware as we should be" about the full picture of organised crime and Soca would bring together the intelligence and the executive aspect of law enforcement to change this.
"How will we know when we have been successful?" he said. "Criminals should start to find the UK an extremely unattractive market."
A big part of Soca's mission is to reduce the harm that serious organised crime does to ordinary people in ordinary communities.
It will also work closely with the private sector to tackle illegitimate businesses, high tech fraud and computer crime which affect every company.
Soca is not a police organisation, marking a departure for UK law enforcement, but once trained its officers, some of whom are former spies, will be equipped with police powers.
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