He promised the Labour faithful the next century would be dominated by "progressive" politics and would create a society based not on "privilege or class but the equal worth of all".

The BBC's John Sergeant: "Tony Blair set himself an ambitious task"

In a 54-minute conference speech, he said: "It is us, the new radicals, the Labour Party modernised, that must undertake this historic mission.

"To liberate Britain from the old class divisions, old structures, old prejudices, old ways of working and of doing things, that will not do in this world of change."

He set out a vision of a new society where the core currency was the talent of individuals.

"The class war is over," he said. "But the struggle for true equality has only just begun.

"To the child who goes to school hungry for food, but thirsting for knowledge, I know the talent you were born with and the frustration you feel that it's trapped inside.

"We will set your potential free."

Click here to listen to Tony Blair's full speech

The prime minister used his speech to unveil plans for a crime bill in the Queen's Speech to introduce DNA testing for criminals.

"I believe in civil liberties too," he said. "The liberty of parents to drop their kids off at school without worrying they're dropping them straight into the arms of drug dealers.

"The liberty of pensioners to live without fear of getting their door kicked in by someone thieving to pay for their habit.

Tony Blair takes the applause and hugs wife Cherie

"So when I speak of a new moral purpose and some on the right and left rise up and say that is nothing to do with politics, leave it all to the bishops, I tell you these people know exactly what I'm talking about."

He said the approach was in touch with young people in society.

"This generation wants a society free from prejudice, but not from rules, from order."

His strong words made it clear he is refusing to be bowed despite criticism on the issue.

"Ours is a moral cause, best expressed through how we see our families and our children," he said.

New promises on health and education

Among the millennium commitments outlined by Mr Blair in his speech were a number of new promises on health and education.

He set a target of half all young adults going into higher education in the next century, although he did not specify exactly when.

The prime minister also revealed another measure: "Today we are announcing a smartcard to offer all 16-18 year olds who stay in education cut price deals at shops, in theatres and cinemas and on trains and buses," he said.

On health, he pledged that within two years everyone would be able to see an NHS dentist by phoning NHS Direct.

"And over the next three years, there will be 7,000 more doctors 15,000 more nurses 37 hospitals built, the whole country covered by NHS Direct, every casualty department that needs it refurbished and waiting times and waiting lists lower at the end of our time in government than at the beginning."

Getting down to 'unfinished business'

Mr Blair described winning a second term in government as "unfinished business" for the Labour Party.

But it was in many respects a chance for the prime minister to bask in his party's admiration.

He arrived on the stage for his third conference speech as prime minister after a blast of Fatboy Slim's hit single Praise You and immediately received a standing ovation from the packed conference hall.

He joked about his slight delay to the conference floor, caused by the mass pro-hunting rally outside.

"Here we go - tally ho," he said. "There hasn't been a safer day for foxes for years.

But he quickly turned to serious issues, saying he did not claim Britain had been transformed but he believed the foundations had been laid.

"While there is one child still in poverty in Britain ... this is one party and one prime minister who will have no rest, no vanity of achievement."

He paid tribute to Chancellor Gordon Brown and said Labour had become the party of economic competence.