Gordon Brown insisted tonight that Britain would remain a powerful voice in Brussels after Labour peer Baroness Ashton was appointed as the European Union's first foreign minister.
She was the surprise choice of the 27 EU heads of government - including the Prime Minister - after Tony Blair's candidacy for the European Council presidency was quashed.
Belgian Prime Minister Herman van Rompuy was named as Europe's first President, with Baroness Ashton of Upholland as High Representative for Foreign and Security Policy.
Mr Brown, who had lobbied for his predecessor, Mr Blair, to get the top job, said Mr van Rompuy had a reputation for "integrity and resolve" and the necessary qualities as a diplomat, statesman and negotiator.
The Prime Minister said he still felt that Mr Blair would have been "excellent" for the job, but said it had become clear that the European centre-right parties wanted one of their own members as President.
He added that Baroness Ashton, who will also be vice-president of the European Commission, would maintain the UK's role in the EU.
The appointment means, however, that Britain has surrendered its influence over trade affairs - Baroness Ashton is currently EU Trade Commissioner.
"It gives Britain a powerful voice both within the European Council and the Commission," Mr Brown said.
"It will ensure, of course, that Britain's voice is very loud and clear. It will ensure that we will remain, as I want us to be, at the heart of Europe.
"In this role, Cathy Ashton will have a unique role over the next five years in shaping the global Europe of the future.
"She will be the first permanent chair of the European Union foreign affairs council, she will represent Europe on the world stage in negotiations with the United States, China, India, Russia and other countries.
"And she will be a vice president of the European Commission giving her a leading voice on all the Commission's proposals."
Baroness Ashton, a former Leader of the House of Lords who has risen rapidly under Mr Brown's premiership, described her job as "a challenge".
Shadow foreign secretary William Hague congratulated Baroness Ashton and Mr van Rompuy and said the Tories would work with them "in the British national interest".
"We did not agree with the Lisbon Treaty's establishment of these posts but they are now a fact," he said.
"We look to the President of the Council and the High Representative to ensure that the EU's business as an association of nation states is conducted efficiently.
"So I am very pleased that those of us across Europe who said that the President should be a chairman, not a chief, have won the argument.
"Gordon Brown spent a great deal of energy and political capital trying to secure the presidency for Tony Blair. The summit's result is a defeat for him."
Baroness Ashton was so unprepared for her "promotion" tonight that she had no speech prepared when she held a joint press conference with Mr van Rompuy.
The rank outsider was elevated to the role of High Representative by a unanimous decision of the 27 EU leaders around the summit table.
And she drew laughter when she made clear she had no clue what was in store.
She had to be called on the phone to see if she would accept the job once Mr Brown dropped his backing for Mr Blair on arrival at the meeting and switched his allegiance to the only other Briton with a chance of capturing one of the prized jobs.
Dashing to the summit after a swift celebratory drink with some of her team of EU Commission trade officials, she said: "I am very honoured and proud to have been asked to take on this role.
"It is a challenge. I was the first female UK Commissioner, first female trade Commissioner and now first female High Representative.
"I will make sure I represent our values across the world, and I will endeavour to do in my own way the best that I can."
She said her style and approach was "quiet diplomacy to get things done".
But she acknowledged that she now had to run the gauntlet of Euro-MPs, who have the power to grill incoming members of the European Commission - and the Lisbon Treaty says the High Representative sits as a Commission Vice-President.
Mr van Rompuy faces no further vetting procedure as President of the Council.
He told the press conference - in three languages - that Europe was a gathering of different nations and different culture which should be respected. He promised: "As president I will listen carefully to everyone."
In a dig at those who backed Mr Blair as a more instantly-recognisable EU political face on the world stage, Mr van Rompuy went on: "There has been a great deal of talk and comment about the future profile and image of the President of the Council. But the key things are dialogue, unity and action: the image of the Council resides in strength through results."
He said the EU was a "union of values" and an "economic project of importance".
The new President added: "That is why we have a responsibility to play an important role in the world."
UK Independence Party leader Nigel Farage said: "The EU has this evening appointed two political pygmies who have the power to remove the last vestiges of democracy from the UK.
"Baroness Ashton is ideal for the role. She's never had a proper job, and never been elected to public office. Naturally, from an EU point of view, that makes her ideally qualified to become the most powerful person in Europe."
Mr Farage said Mr van Rompuy had emerged as the compromise presidential candidate "who will prove incapable of stealing anyone else's limelight".
He added: "Baroness Ashton is possibly the only person in Europe less well known than van Rompuy. A former CND employee, she will be responsible for Europe's security and defence policy."