Tony Blair has conceded he will not serve a "full term" before standing down but rejected pressure from Labour MPs for him to announce his departure date.
The Prime Minister told the Parliamentary Labour Party last night that he would give "ample time" to his successor to take over before the next general election. He denied he would damage Labour's prospects by hanging on too long, saying: "My legacy is a fourth term for Labour."
Although two MPs, Andrew Smith and Geraldine Smith, urged Mr Blair to announce his departure timetable, most of those present appeared to welcome his assurances. There was growing speculation that he would quit in May next year after completing 10 years in Downing Street.
After a packed, one-hour meeting, critics welcomed Mr Blair's shift away from his previous formula that he would serve a full term. "We have been eyeball-to-eyeball and the Prime Minister just blinked," one said.
Earlier, Mr Blair had a meeting with Gordon Brown at Downing Street at which they held "talks about talks" on how to handle the succession and end the damaging infighting that has erupted since Labour lost more than 300 seats at Thursday's local elections.
Backbench allies of Mr Brown welcomed the more emollient tone adopted by Mr Blair. They were enraged on Sunday when the Home Secretary John Reid accused Brownites of being part of a plot to unseat the Prime Minister and return to Old Labour policies.
However, there was no sign of an agreement between the Prime Minister and Chancellor about when the "stable and orderly transition" they both support should take place. The Brown camp wants a much closer partnership with Mr Blair from now until he departs rather than a "big bang" handover when the Prime Minister decides the time is right.
Rebuffing calls from MPs who want him to "name the day", Mr Blair told his monthly press conference: "To set a timetable now would simply paralyse the proper working of government, put at risk the necessary change we are making for the country and therefore damage the country."
He warned that Labour could let the prize of a fourth term slip from its grasp if the voters saw it was obsessed by internal rows and speculation about his departure. He insisted naming his resignation date "wouldn't end this distraction, but take it to a new level."
But Mr Blair offered two olive branches to Mr Brown. He promised he would allow his successor the time he needed to establish himself and dropped his mantra that he would serve a "full third term". And he endorsed the Chancellor as his favoured successor, saying: "Of course he is. When have I ever said anything different? That is why I suggest everyone calms down and lets us get on with the business of governing."
He described Mr Brown as "New Labour to his fingertips" as he tried to divide his critics into two camps - "reasonable" people who wanted to know he was still committed to a "stable and orderly transition" and others who wanted a return to Old Labour. Despite Mr Blair's plea to be allowed to get on with his job, some Labour MPs still demanded he reveal his departure plans - at least to Mr Brown.
Alan Whitehead, a former minister, said: "We need a framework or a protocol which enables everyone to have certainty. In order for people across the party to sign up to that idea of certainty, that certainty needs to be pretty clear and on the table over the next few weeks and months."
David Cameron, the Conservative leader, said there was "civil war" at the highest levels of the Government. He told a press conference the Prime Minister should disclose his retirement plans. "I think the sooner he goes the better, because I don't see how his authority can recover," he said.
PM's coded messages
BLAIR SAID: "There are those who genuinely want me to honour the commitment to a stable and orderly transition. And I will honour it, with the time plainly needed for my successor to establish himself."
HE MEANT: I admit I was never going to serve that "full third term" I kept banging on about. I will quit well before the next general election - but I am not going to say when.
BLAIR SAID: "To state a timetable [for his departure] now would simply paralyse the proper working of government."
HE MEANT: I goofed by announcing in 2004 that I would not fight a fourth election as leader. But if I give a date now, I would be even more of a lame duck than I already am.
BLAIR SAID: "The public are the boss. If we are not careful and don't get on with the business of governing, we will lose them."
HE MEANT: Stop rattling my cage, Gordon - or the disunity will cost Labour the next general election. You will be a "tail-end Charlie" prime minister and the election scorecard will read Blair 3, Brown 0.
BLAIR SAID: On whether Gordon Brown was still his choice to succeed him - "Of course he is. When have I ever said anything different? That is why I suggest everyone calms down."
HE MEANT: Call off your dogs, Gordon, and give me another year in No 10. Then I'll make clear I'm backing you. Otherwise that rottweiler John Reid will stand against you.
BLAIR SAID: "I believe that those people who maybe feel or hope that Gordon would take the Labour Party in a different direction from New Labour are - on the basis of the discussions that I have had with Gordon - completely mistaken. I have no doubt he will be absolutely New Labour to his fingertips."
HE MEANT: I am going to try to lock Brown into my reform programme.
BLAIR SAID: "I have led the Labour Party, after four election defeats, to three election victories. So I have the interests of the Labour Party at heart. But they are not served by this perpetual distraction."
HE MEANT: The party has got to let me get on with the job.