John Prescott announced today that he will quit as Deputy Prime Minister before next year's party conference.
In an emotional speech at the close of the party's Manchester conference, Mr Prescott told delegates: "This will be my last conference as your deputy leader.
"Thank you for electing me and thank you for all the support over the last 12 years."
It's expected that he will quit at the same time that Tony Blair stands down as Prime Minister.
Mr Prescott also apologised for letting the party down following the revelation of his affair earlier this year, saying: "I know in the last year, I let myself down, I let you down.
"So conference, I just want to say sorry."
Mr Prescott said: "I've been absolutely privileged to attend this conference for over 40 years. I am honoured to have served as Tony's Deputy Prime Minister and just as honoured to serve as your deputy leader."
Confirming his decision, he told delegates: "I've always said I would inform you, the party, first about my intentions, not the press."
He was given a standing ovation by delegates at the start and end of his barnstorming end-of-conference speech.
Mr Prescott coupled his announcement with a warning about disunity and appealed for an "orderly" transition in electing a new leader and deputy leader.
He dubbed talk of Labour benefiting from a period in Opposition as "dangerous and foolish nonsense".
Mr Prescott paid tribute to Mr Blair as "our most successful Prime Ministers ever" and recalled his achievements in combating climate change and tackling poverty in Africa.
He also praised Chancellor Gordon Brown for his "tireless work" in helping reduce the indebtedness of third world nations but did not endorse his likely succession as Prime Minister.
"Tony, I'm proud of what you and I have achieved together," he said. "We've had robust debates, as you know, from time to time and we've agreed to disagree.
"But conference, I have never doubted this man's courage, commitment and dedication to improving the lives of all our people and to safeguarding the interests of this country.
"He has given us an unprecedented period in office with three landslide victories and he has achieved what no other Prime Minister has before him - economic prosperity and social justice."
With the Prime Minister watching from the platform, Mr Prescott went on: "Tony, we all know the greatest tribute we can make to your time in office is to find within ourselves the energy, vision, commitment and yes, discipline to win a historic fourth general election victory."
The debate about a successor must be conducted within the framework of unity achieved in 1992 and 1994.
"I know from my experience over four decades the damage disunity can do. I've seen Labour Governments elected with big majorities, driven out within a few years as the party bitterly divided."
Mr Prescott said Labour learned the "painful lesson" about disunity in the 1990s and had remained disciplined for the past 12 years.
"It is up to us - each and every one of us - to make this an orderly and peaceful transition."
The party would never forgive anyone who undermined it.
Earlier, Mr Prescott joked about being called an "Old Labour" traditionalist and told delegates: "I'm still a fish and chip man, myself. As some might even say: I'm fat for purpose."
He also mocked Tory leader David Cameron's green credentials.
"If David Cameron thinks that a photo-shoot of him hugging a husky dog and adopting an oak tree for their emblem could fool the British people into thinking that the Tories have fundamentally changed, he's barking up the wrong tree."
Mr Prescott ended his speech with a vow not to leave political life.
"I can assure you conference, I'll not be leaving the political fight. I'll never leave the political fight. I will never give up campaigning for the Labour party, as many of you do.
"Yes I admit, I will be swapping the Government Jag for this bus pass to campaign for Labour.
"But nevertheless whether it's a battle bus or a public bus I'll be out there fighting for Labour. No doubt they'll be calling me two bus Prescott.
"Remember, remember, remember who the real enemies are - the Tories, the Liberals and yes the Nationalists."
To a rousing standing ovation he added: "As Tony said, let's get after them. Let's get after them. Do it for me, do it for Tony, do it for your families, do it for your neighbours. Do it for the country and yes, do it because under Labour, Britain got better."
Mr Prescott was joined on stage by his wife Pauline who kissed him as he received a three-minute standing ovation.
A short video was broadcast showing humorous clips of his political career - from dancing at party conferences to his jokey likening of former Cabinet colleague Peter Mandelson to a Chinese mitten crab.
But it was slow motion footage of his infamous punching of a protester who threw an egg at him that drew the biggest cheer from the audience.
The Prescotts were joined centre stage by Tony and Cherie Blair. They joined hands and raised them aloft before making way for the Halle Orchestra's youth choir.
Cherie Blair joined in enthusiastically as they performed the title song from the musical Oklahoma.
The 2006 conference closed with delegates singing the Labour anthem, The Red Flag, and the hymn Jerusalem.