It's my privilege to be the first Labour leader in 100 years to speak to our conference six and half years into Government. We've never been here before. We've never come this far. Never governed for so long. Now with the prospect of a full third term. But it's a testing time. I now look my age. You feel yours.

It's my privilege to be the first Labour leader in 100 years to speak to our conference six and half years into Government. We've never been here before. We've never come this far. Never governed for so long. Now with the prospect of a full third term. But it's a testing time. I now look my age. You feel yours.

I've had plenty of advice over what I should say in this speech. Some of it I have even asked for. One suggestion was leading you all in a chorus of "Always look on the bright side of life". So what do we do? Give up on it? Or get on with it? That's the question. Yes, the cynics say, New Labour's been a great electoral machine but you've done little with it.

I could recite you the statistics: The lowest inflation, mortgage rates, and unemployment for decades. The best ever school results, with over 60,000 more 11-year-olds every year now reaching required standards in English and Maths. Cardiac deaths down 19 per cent since 1997, cancer deaths 9 per cent. Burglaries down 39 per cent.

But it's not statistics that tell us what has changed, it's people. So why is it so tough?

Government's tough. Fulfiling but tough. Opposition was easy. All our MPs had to do was to go back to their constituencies and blame it on the Government. Some of them still do.

Iraq has divided the international community. It has divided the party, the country, families, friends. I know many people are disappointed, hurt, angry. I know many profoundly believe the action we took was wrong. I do not at all disrespect anyone who disagrees with me. I ask just one thing: attack my decision but at least understand why I took it and why I would take the same decision again.

Imagine you are Prime Minister. And you receive this intelligence. And not just about Iraq, but about the whole murky trade in WMD. And one thing we know, not from intelligence but from historical fact: That Saddam's regime has not just developed, but used such weapons gassing thousands of his own people. And has lied about it consistently, concealing it for years even right under the noses of the United Nations inspectors. And I see the terrorism and the trade in weapons of mass destruction growing. And I look at Saddam's country and I see its people in torment ground underfoot by his and his sons' brutality and wickedness.

So what do I do? Say: "I've got the intelligence, but I've a hunch it's wrong?" Leave Saddam in place but now with the world's democracies humiliated and him emboldened?

You see, I believe the security threat of the 21st century is not countries waging conventional war. I believe that in today's interdependent world the threat is chaos. It is fanaticism defeating reason.

Suppose the terrorists repeated September 11th or worse? Suppose they got hold of a chemical or biological or nuclear dirty bomb; and if they could, they would. What then? And if it is the threat of the 21st century, Britain should be in there helping confront it, not because we are America's poodle, but because dealing with it will make Britain safer.

There was no easy choice.

So whatever we each of us thought, let us agree on this. We who started the war must finish the peace. Those British soldiers who died are heroes.

We didn't regret the fall of Milosevic, the removal of the Taliban or the liberation of Sierra Leone and, whatever the disagreement, Iraq is a better country without Saddam.

And why do I stay fighting to keep in there with America on the one hand and Europe on the other? Because I know terrorism can't be defeated unless America and Europe work together. And it's not so much American unilateralism I fear, it's isolation. It's walking away when we need America there, engaged. Fighting to get world trade opened up. Fighting to give hope to Africa.

Changing its position, for the future of the world, on climate change. And staying with it in the Middle East, telling Israel and the Palestinians: Don't let the extremists decide the fate of the peace process, when the only hope is two states living side by side in peace.

And it's not Britain being swallowed up in some European federal nightmare as if Britain wasn't strong enough to hold its own, that I fear.

It's Britain leaving the centre of Europe, retreating to its margin at the very moment when the fate of Europe is being decided, 10 new nations and Britain's leadership has never been more essential. That's why, apart from all the good economic reasons, it is madness for Britain to give up the option of joining the Euro.

And I know both on terrorism and on Europe my views cause offence. But I can no more concede to parts of the left on the one than I can genuflect to the right over the other, because I believe both positions are vital in delivering justice in a modern world.

The original conference title read "Fairness For All". We changed it to "A Future Fair For All". Let us be absolutely clear about where we are today and why. Everything we have done has led up to this moment.

To bring new hope and opportunity to the lives of all our citizens we always knew we would have to do something that Labour governments have never succeeded in before ­ to renew in power, as we renewed to achieve power. People ask me if I am surprised that things have got so tough. I say I am surprised it has taken so long.

But now, is where we show whether we have the mettle not just to be a longer or even a better Labour government than those that went before us, but whether we usher in a political era where progressive politics is to the 21st century what Conservative politics was to the 20th. I do not just want an historic third term. Our aim must be an historic realignment of the political forces shaping our country and the wider world.

Here we are, poised, six-and-a-half years in, with a fantastic opportunity, to use or to lose. Over the coming months, I want our party to begin a new discussion with the people of Britain. Across major policy areas, the Government will publish a prospectus, discussing the progress we have made and the challenges our country still faces.

We should have the confidence to open up the debate, be honest about the challenges, lay out the real choices. But this must not just be a discussion between us. Because if we want a government in touch with the party, we must have a party in touch with the people. And so let us make this the biggest policy consultation ever to have taken place in this country. The ministers from me down, our MPs out in every constituency hosting discussions that engage with the whole community.

So, when we begin our manifesto process, when the policy forum draws our thinking together, I want it to address the big questions, engage with ordinary people's hopes and fears. A progressive, imaginative, vibrant public debate about how we together build a future fair for all.

Not the daily diet of froth; not turning serious politics into soap opera, debasing it, turning it into an endless who knew what, when ­ as if politicians simply competed on villainy. The British people deserve better from the politicians and with respect, from parts of the media too. But real politics about real people.

And, in the programme we set out, let our idealism be undimmed, but let us show what experience has taught it.

Because the world changes, we have to change. No longer "one size fits all". Recognising that in the 21st century, you can't run a personalised service by remote control.

That's the reason for change. Not to level down but to level up. Not to privatise but to revitalise a public service we all depend on.

I don't want the middle class fighting to get out of the state system. I want them fighting to get into it, but on equal terms with working class patients and children.

That's what the founders of socialism dreamt of.

That's why we are investing in our poorest communities. And it's the whole basis of tax credits. If you work, we will help you with the working tax credit. If you are bringing up kids, we will support you with child benefit and child tax credit. If you save, we will help you with pension credit that will boost the incomes of half of Britain's pensioners by an average of £400 a year ­ the biggest advance in combating poverty in old age in a generation, but in the future given to those that need it most.

And fairness in a future where millions are on the move. Britain should always be open to refugees. We can be proud of the part immigration has played in this country. But economic migrants should come in through a proper immigration process.

Changing the law on asylum is the only fair way of helping the genuinely persecuted ­ and its best defence against racism gaining ground. We have cut asylum applications by a half. But we must go further.

We should cut back the ludicrously complicated appeal process, derail the gravy train of legal aid, fast-track those from democratic countries, and remove those who fail in their claims without further judicial interference. And in a world of mass migration, with cheaper air travel, and all the problems of fraud, it makes sense to ask whether now in the early 21st century identity cards are no longer an affront to civil liberties, but may be the way of protecting them?

These are some of the challenges: What's fair when we want not a basic but a good standard of life in retirement that is bound to last longer than ever before?

What's fair when the users of universal services want to be treated not as grateful welfare recipients but demanding 21st century consumers?

What's fair for the mother who, a generation ago, would have expected to stay at home but now wants the chance to work flexibly? What's fair in a world in which rail and Tube are used so much more than in 1997, where we desperately need a 21st century transport system and cannot fairly fund it all from the taxpayer?

What's fair in a world where the insecurities multiply so fast and the wheels of government turn so slow?

Where we have to pick our way to sanity through a cacophony of pressure and hassle which are not the product of any one moment in time but of the times in which we live?

Fairness remade. A Britain without poverty. First class public services. Community renewed. A progressive future within our grasp. The dreams of generations who came to conferences like this becoming real, hopes that were once utopian becoming everyday.

I can only go one way. I've not got a reverse gear. The time to trust a politician most is not when they're taking the easy option. Any politician can do the popular things. I know, I used to do a few of them.

I know it's hard for people to keep faith. Some of the people may have a different take on me. But I have the same take on them. I trust their decency. I trust their innate good sense.

I know I am the same person I always was, older, tougher, more experienced but basically the same person believing the same things. I've never led this party by calculation. Policy you calculate. Leadership comes by instinct.

I believe the British people will forgive a government mistakes; will put the media onslaught in more perspective than we think; but what they won't forgive is cowardice in the face of a challenge.

After six years, more battered without but stronger within. It's the only leadership I can offer. And it's the only type of leadership worth having.

The purpose: To rebuild the public realm, to discover amongst all the modern pressures, the virtues of community, of tolerance, of decency, of respect. To bring to the self interested consumer age the value of solidarity.

Not to cease to want the best for oneself but to wish it for all. To build a country not just proud of their own achievements but proud of what we can do together. Proud not just of how they get and spend but what we in friendship with can do for each other.

This is our challenge. To stride forward where we have always previously stumbled. To renew in government. Steadfast in our values. Radical in our methods, open in our politics.

If we faint in the day of adversity, our strength is small. And ours isn't. We have the strength, the maturity, now the experience to do it.

So let it be done.

UNIONS' RESPONSE

KEVIN CURRAN, General secretary of the GMB union: "There was nothing new in it. It was not a speech that gave us any radical vision for the future. It did not address any of the issues our members face every day such as rightsand support for manufacturing.''

TONY WOODLEY, leader of the Transport and General Workers' Union: "It's what we have wanted him to say for a long time. He said he did not have a reverse gear. Well, we want him to accelerate to stop the haemorrhage of manufacturing jobs."

DEREK SIMPSON leader of the Amicus union: "It's what happens on the streets in the coming months that matters. The inspiration provided by Mr Blair should be carried forward. But it is what will be done rather than what he said today that matters.''

DAVE PRENTIS, leader of Unison, the country's biggest union: "This is the speech of a conviction politician at his best. And it was clear from the reaction in the hall that the party wants him to succeed and to win a third term.''