BBC Ireland Correspondent Denis Murray: "An unprecedented high in Anglo-Irish relations"

In a speech to the Irish Parliament, he appealed to nationalists and unionists to bury their differences and work together.

He said after decades of division caused by Northern Ireland, the province could now bring the two countries closer together.

Tony Blair received a standing ovation for his speech

In the first speech to the Dail by a UK prime minister since Dublin declared independence in 1922, Mr Blair urged the Irish not to fear or hate unionists.

"They are good and decent people just like you," he said. "They feel threatened - threatened by terrorism and worried that the Good Friday Agreement would force them into a united Ireland.

"Just as we must understand your yearning for a united Ireland, so too must you understand what the best of unionism is about."

Announcement next week

Later in the day, Mr Blair urged politicians on both sides of the sectarian divide to reach consensus on problems over political bodies.

A truly historic occasion

As Northern Ireland's Deputy First Minister Seamus Mallon said he was optimistic of an announcement next week, Mr Blair told all sides to "crack on" with talks.

After a day of bitter words in Stormont on Wednesday, a new note of hope was sounded by all sides following the UK prime minister's speech.

But genuine concerns remain on both sides, particularly on decommissioning, which could yet scupper progress towards the establishment of a north-south body.

Historic links between nations

During his speech, Mr Blair stressed the links between the UK and Ireland, including the impact of Irish immigration on his own constituency and the whole of Britain's development.

Prime Minister Tony Blair: "Like it or not, we the British and the Irish are irredeemably linked together"

He told the Dail his mother was born in Ireland and he spent every childhood summer holiday until the Troubles began there.

"Like it or not, we the British and the Irish are irredeemably linked together.

"So much shared history, so much shared pain and now the hope of a new shared beginning."

Public frustrated at lack of progress

His theme of a new dawn in the two nations' relations was continued by Irish Prime Minister Bertie Ahern.

Mr Ahern told young people at St Aidan's Secondary: "The year I left this school, in the autumn of 1968, on the 5th of October 1968 the Troubles started and they never really ended.

"Hopefully the beginning of the end was when Prime Minister Tony Blair and myself at seven o'clock on the 10th of April signed an agreement that said there was a better way of doing things and that way is not killing, bombing, murdering."

Blair: No turning back

Prime Minister Tony Blair: "I am not asking anyone to surrender, I am asking everyone to declare the victory of peace"

Mr Blair admitted the peace process faced difficulties but said it had gone too far now to turn back.

He said the impact of his meeting with survivors of the Omagh bombing, which killed 29 and injured more than 200, strengthened his determination to press ahead.

Deadlock over decommissioning remains

"It is time now I believe for all the parties to live up to all their commitment, time for north-south bodies to be set up, time to set up the institutions for a new government, time for the gun to be taken out of politics once and for all.

"I am not asking anyone to surrender, I am asking everyone to declare the victory of peace.