Tony Blair pleaded with his MPs to give him the time and space to ensure a "stable and orderly transition" to a new leader but rebuffed calls to resign quickly.
At a heated meeting of the Parliamentary Labour Party, the Prime Minister dismissed demands for him to water down his plan to pursue an "unremittingly New Labour" agenda before he leaves Downing Street. He offered no concessions to MPs demanding a greater say over policy. Six MPs criticised Mr Blair but the dissidents were drowned out by loyalist MPs, who were infuriated by the rebels' calls for him to quit sooner rather than later after his majority was cut by almost 100 in last week's general election.
Mr Blair acknowledged that Iraq and his own leadership had been an issue in some constituencies but told his critics that they should not turn Labour's third successive victory into a defeat. He appealed to them not to jeopardise the party's chances of winning a fourth term by trying to push him out of office. "If you react like this was a defeat not a victory, you will not get a different sort of Labour Party, but the Tories," he told them.
The Prime Minister demanded the same loyalty he had shown to his predecessors Neil Kinnock and John Smith and the chance to implement the Labour manifesto.
He said: "We have given people the certainty that at the next election there would be a different leadership. There is a need for a stable and orderly transition to that leadership but people should give me the space to ensure that that happens."
He declared that Labour could emulate the "Tory century" of the 1900s by dominating British politics for 100 years. "We won from a centre-left position and I am absolutely convinced we have got to stay there. The most important thing for us is to build out from the centre rather than lurch this way or that.
"By keeping in the centre, we can force the Liberal Democrats and Tories to choose. The Tories have to decide whether to go to the centre or to a Thatcherite position."
Mr Blair signalled a tougher line against the Liberal Democrats, saying he would no longer give them the "room" they have enjoyed. "The Lib Dems will have to decide - do they want Labour votes or Tory votes? We have got to make that choice profoundly painful for them."
As to whether he had become a liability, Mr Blair said the swing against Labour was not uniform. "People did not go out last Thursday to try to elect a different government."
Pleading for unity, the Prime Minister said: "Our job is to implement the manifesto, but it is only going to be carried through if we are united as a political party. Our fourth victory would be under a different leadership, but we have to remain united until then."
Labour dissidents said they believed his remarks about an orderly transition meant Mr Blair had struck a deal with the Chancellor Gordon Brown to step down within the next 18 months. Ian Gibson, a prominent rebel, said: "It cannot mean anything else than he has done a deal with Gordon."
Alan Simpson, a member of the left-wing Campaign Group, warned: "Blair may have done a deal with Gordon Brown, but anyone who believes the message from the electorate was a demand for change without a change of direction is living in cloud cuckoo land."
Although outgunned, the rebels made it clear they would not be silenced. Bob Marshall-Andrews, MP for Medway, said Mr Blair must stand down before next May's council elections.
"If he does not go, a lot of our colleagues in local government will not survive. It has got to be dealt with now," Mr Marshall-Andrews said.
"The Prime Minister does not believe he is unpopular. He does not believe it is anything to do with him. We know from the doorsteps that Tony Blair is very, very unpopular. But it is not going to get through to him because of the type of prime minister he is. He is in denial."
Jeremy Corbyn, MP for Islington North, said: "MP after MP relayed the clear message ... from the electorate that they don't want more wars or privatisations - and it is up to the Prime Minister to recognise that."
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