Although he did not mention al-Qa'ida by name, the Prime Minister identified the terrorists as those who "acted in the name of Islam". He said: "We will not be terrorised."
He tried to prevent a backlash against Muslims, welcoming the statement by the Muslim Council of Great Britain condemning the atrocities. "We know that the vast and overwhelming majority of Muslims are decent law-abiding people who abhor these acts of terrorism every bit as much as we do," Mr Blair said.
Looking emotional during his broadcast in Downing Street, he said: "This is a very sad day for the British people but we will hold true to the British way of life.
"We will not be divided and our resolve will hold firm. We will show, by our spirit and dignity, and by a quiet but true strength that is in the British people, that our values will long outlast theirs.
"When they try to intimidate us, we will not be intimidated, when they seek to change our country, our way of life by these methods, we will not be changed. When they try to divide our people or weaken our resolve, we will not be divided and our resolve will hold firm."
Mr Blair flew to London for a meeting of the Government's emergency committee, codenamed Cobra, with security chiefs and senior ministers, leaving Sir Michael Jay, the head of the diplomatic service, to run the G8 summit negotiations on climate change and African aid.
Before flying out of Gleneagles in an army helicopter, the Prime Minister condemned the bombings as a "barbaric act". US President George Bush said security was being raised in America and it was tightened in European capitals. Mr Bush said: "The war on terrorism goes on. I was most impressed by the resolve of all the leaders in the room.
"We will not yield to the terrorists. We will find them and bring them to justice. And we will spread an ideology of hope and compassion that will overwhelm their ideology of hate.''
The G8 leaders showed a united front, appearing with Mr Blair as he read out a joint statement saying it was "not an attack on one nation but on all nations and on civilised people everywhere". They will today reinforce their message that the London bomb outrages will not be allowed to wreck progress on the summit.
However, the bombings cast a pall over the summit and left Downing Street officials shocked a day after the jubilation of London winning the Olympic bid. One No 10 source said: "We were ecstatic and then this happens. We have gone from the highs to the lows. We are shattered."
In the Commons, the mainstream parties condemned the attacks. But the unity cracked when George Galloway, the anti-war Respect Party MP, said that Londoners had "paid the price" for Tony Blair's decision to go to war in Iraq and Afghanistan.
Adam Ingram, the Armed Forces Minister, accused Mr Galloway of "dipping his poisonous tongue in a pool of blood".Sylvia Heal, the Deputy Speaker, urged all MPs to "think very carefully about their words on this particular day".
In an emergency Commons statement, Charles Clarke, the Home Secretary, condemned the "criminal and appalling acts". He added: "We are determined to do whatever we have to to ensure that those who seek to destroy [our] democracy are themselves unable to carry out what they would wish to do."
David Davis, the shadow Home Secretary, called the explosions "acts of almost unspeakable depravity and wickedness". He added: "This is not just an attack on our capital city but on our country and on our way of life."
In Gleneagles, the day had started with a carefree mood of optimism among the leaders that a deal would be struck on climate change and Africa. President Bush joked with Mr Blair at a joint press conference at 8.39am about his fall from his bike on Wednesday, saying: "It's a beautiful day for a bike ride."
Twelve minutes later, the bombers struck in London. Mr Blair was in a meeting with the Chinese Prime Minister Wen Jiabao when the news came in.
Mr Blair immediately suspended further meetings, and held talks with security chiefs and senior ministers in London. Security at Gleneagles, already tight following running battles between police and protesters was immediately stepped up. Police, environmental campaigners and world leaders crowded around televisions for the news.
Mr Blair was immediately defiant. "The perpetrators of today's attacks are intent on destroying human life. The terrorists will not succeed."
The G8 leaders were supported by China, India, the UN secretary general Kofi Annan and EU Commission president Jose Manuel Barroso. Mr Blair flew to Edinburgh airport at 1.27pm and boarded a jet for London. Within 10 minutes of arriving at Downing Street he started the Cobra meeting.
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