PM wants two more years but ministers say Iraq will be key

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Tony Blair intends to lead Labour into the next general election but to stand down one or two years later, close allies said yesterday as they tried to kill speculation that he might quit this year.

Tony Blair intends to lead Labour into the next general election but to stand down one or two years later, close allies said yesterday as they tried to kill speculation that he might quit this year.

Cabinet ministers dismissed the idea that Mr Blair would be forced out by Labour MPs but said privately that the timing of his departure could depend on events in Iraq. Some ministers believe he may rethink his plan to fight the general election if Iraq is still in crisis when Labour's annual conference takes place in October. One minister said: "It is more likely to be determined by what happens on the ground in Iraq than by Labour MPs."

Despite Mr Blair's publicly stated intention to serve a full third term, his private goal is said to be to stand down soon after the referendum on the European Union constitution, expected in early 2006, and to endorse Gordon Brown as his successor.

In the clearest sign yet that Mr Blair would not serve for a whole parliament if he wins a third election victory, one aide said: "He has never wanted to 'go on and on'. He has always known there will come a moment when it's time to go."

John Prescott, the Deputy Prime Minister, who has a pivotal role in the Labour succession, wants Mr Blair to lead Labour into the general election, believing that a leadership election before then would harm the party's prospects.

He has told Mr Blair he deeply regrets his comments in an interview with The Times at the weekend in which he unintentionally sparked another flurry of speculation about the Prime Minister's future.

Mr Prescott had intended to fire a warning shot at ministers whom he believes are jockeying for position in a post-Blair government. His intended targets were Jack Straw, the Foreign Secretary, who has forged an alliance with Mr Brown, and two men who may stand against the Chancellor for the leadership - Charles Clarke and John Reid. At the same time, Mr Prescott intended to urge Mr Brown's supporters not to rock the boat before an election by talking up the Chancellor's prospects of taking over before then.

"John is furious with himself," one friend of Mr Prescott said yesterday. "He meant to be helpful, but he is now licking his wounds."

Last night Mr Prescott told Labour MPs at their weekly meeting not to "play the media's game" by talking about the leadership. He complained that his weekend remarks had been misinterpreted but one of those present said: "He read the riot act to the MPs - and to himself."

The Deputy Prime Minister said Mr Blair would continue to lead the party, insisting that Labour had "a damn good record" and should emphasise bread-and-butter issues such as health, education and the economy. "The reality is that Iraq is not being raised on the doorsteps," he said.

Mr Prescott described as "a load of nonsense" newspaper reports that he held a 90-minute discussion about the succession with Mr Brown at the Loch Fyne Oyster Bar in Argyll nine days ago. Earlier he said: "Just for the record, in the five minutes I was there I bought kippers. The rest is press prattle."

Peter Mandelson, the former Cabinet minister and a Blair ally, said that "the best Prime Minister to lead us out of the present difficulties is the one we have." Writing in the London Evening Standard, he said: "He is not someone who is going to lose his nerve or walk away because the pressure is too great. And he is not going to buckle now in the face of frothed-up front pages and wishful editorials."

Lord Falconer of Thoroton, the Lord Chancellor, said Mr Blair would remain for the "foreseeable future". Asked if he had discussed the situation with his close friend, Lord Falconer said: "Yes I have and he is determined to stay." Peter Hain, Leader of the Commons, and Mr Clarke, Education Secretary, confirmed similar talks with Mr Blair.

Mr Clarke and David Blunkett, the Home Secretary, dismissed Mr Prescott's weekend description that the [tectonic] "plates" in Cabinet were moving.

Mr Brown spoke warmly of his friendship with Mr Blair at the launch of a report about youth volunteering. A Treasury spokesman said: "The Chancellor and the Prime Minister are in daily contact and they are both clear that we are not going to be diverted by malicious, divisive and baseless gossip."