The Prime Minister went ahead with a planned meeting with intelligence and security chiefs called to discuss whether they needed urgent legislation in the wake of the 7 July bombings. The second attacks may increase pressure on Mr Blair to recall Parliament during its 80-day summer recess, which began last night, to rush through the new anti-terror laws.
One minister said: "We warned more attacks were likely but there is concern that the public hoped that what happened two weeks ago was a one-off. This may be harder for people to take. It may increase fear and day-to-day disruption."
Mr Blair was in his Downing Street "den", where he likes to do business on his sofa, with the Australian Prime Minister, John Howard, when officials brought news of yesterday's explosions at 1.15pm. The two leaders squeezed in a lunch at No 10, during which Mr Blair was updated by his aides. He cancelled a planned visit to an east London school to publicise the 2012 Olympics to chair a hastily called meeting of the Government's Cobra emergency committee, which meets underground in the Cabinet Office. The 20-minute session at 2.30pm was attended by Sir Ian Blair, the Metropolitan Police Commissioner; Charles Clarke, the Home Secretary; Jack Straw, the Foreign Secretary; John Reid, the Defence Secretary; Alistair Darling, the Transport Secretary; and Patricia Hewitt, the Health Secretary.
Mr Blair then went ahead with a joint press conference in No10 with Mr Howard, a staunch ally over the Iraq war, which was dominated by the still-unfolding events in London.
Appealing to people to "react calmly", the Prime Minister said: "I think that everyone is canny enough to know what these people are trying to do and that is to intimidate people and to scare them and to stop them going about their normal business," he told reporters in Downing Street.
"It is important that we respond by keeping to our normal lives and doing what we want to do because to do otherwise is, in a sense, to give them the very thing they are looking for."
Mr Blair referred approvingly to a front-page headline in the early editions of yesterday's Evening Standard newspaper, "London United", adding: "That's how people are, and I think that's how they'll stay." But the later editions read: "New bomb terror on the Tube."
The Prime Minister insisted that the attacks on London were not a result of the Iraq war. He said the "roots of this are deep" and similar terror attacks went back over 10 years.
"What they want us to do is to turn round and say, 'Oh, it's our fault.' The people who are responsible for terrorist attacks are the terrorists," he said.
"This combination of this evil, bankrupt ideology based on the perversion of Islam with terrorism ... has built up over a period of time. It will have to be dismantled over a period of time. But I have no doubt at all in the end the values that we represent are the values that will triumph."
Mr Blair was given strong support by Mr Howard, who denied any link with the Iraq war, saying that terrorism was not "incident-specific".
At 4.30pm the Prime Minister went ahead with his meeting with security chiefs which was arranged last week to get their views on the lessons from the 7 July attacks. Emphasising Mr Blair's determination not to be knocked off course by the terrorists, his official spokesman said: "The agenda is exactly the same as it was going to be."
The Government plans to create three new offences: committing acts preparatory to terrorism; terrorist training; and indirectly inciting terrorism. The timing of the legislation will depend on how urgent the security services judge it. If necessary, Parliament could be recalled in September.
Reaction from British Muslims
THE MUSLIM COUNCIL OF BRITAIN
"The MCB expresses its gravest concern... Thankfully the criminals did not cause any serious harm but we urge all communities to show vigilance and work together to preserve the security of the nation. We have to apprehend and defeat these criminals."
THE MUSLIM ASSOCIATION OF BRITAIN
"We urge every member of the community to maintain vigilance and co-operate fully with the authorities to foil ... a continuing campaign aimed at disrupting our lives and instilling horror in our minds and hearts."
THE FEDERATION OF STUDENT ISLAMIC SOCIETIES
"We should not allow the security of our country and the safety of our people to be compromised. We should do everything we can to defeat those criminals who attempt to disrupt our lives and threaten the peace of the country."
A mechanic from Baghdad who works at Shepherd's Bush: "These people who carry out these bombings are not Muslim. A Muslim cannot kill another person or another living thing, that would be haram [forbidden]."
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