Mr Blair told the Taleban to give up Osama Bin Laden or face attack.
The Taleban's ambassador to Pakistan responded by saying that Bin Laden would not be surrendered without proof that he was involved in the attacks. Abdul Salam Zeef, added that the Taleban were ready for negotiations with Washington on the issue.
But US President George Bush repeated his rejection of talks with the Taleban.
Nato's Secretary-General, George Robertson, earlier confirmed the organisation had seen "clear and compelling" evidence from the US that Saudi-born Bin Laden and his al-Qaeda organisation were involved in the devastating assaults on the World Trade Center and the Pentagon.
Mr Blair said: "I say to the Taleban, surrender the terrorists or surrender power. That is your choice."
Condemning the Taleban as a regime that oppressed the people of Afghanistan and flooded the streets of the West with drugs, he told the Labour Party's annual conference: "Be in no doubt at all, Bin Laden and his people organised this atrocity. The Taleban aid and abet him.
"He will not desist from further acts of terror. They will not stop helping him."
Mr Zaeef said Afghanistan needed help not war, but said his country believed God would help them if such an attack was forced on them.
In other developments:
Mr Blair stressed: "The action we take will be proportionate and targeted, we will do all we humanly can to avoid civilian casualties."
He added: "Whatever the dangers of the action we take, the dangers of inaction are far, far greater."
Click here for map of possible targets
The US is pressing ahead with its coalition building, with Defence Secretary Donald Rumsfeld travelling to the Gulf region on Tuesday night for talks with regional leaders.
He will visit four key supporters of the US war against terrorism - Saudi Arabia, Oman, Egypt and
Uzbekistan. He said he hoped the meeting with Uzbek leaders would be useful as Uzbekistan borders Afghanistan.
The United States has maintained a major military presence in the Gulf since the end of the Gulf War in 1991.
Military presence
In addition it has massed about 30,000 military personnel in two aircraft carriers - the USS Carl Vinson and the USS Enterprise - and 350 planes in the Gulf and Arabian Sea.
Two more carriers are also heading for the region - the USS Theodore Roosevelt and USS Kitty Hawk.
Britain has sent 24 Royal Navy warships, as well as 23,000 troops, to Oman, but military officials insist they are simply on a long-planned exercise.
Some reports say US and UK special forces are already operating within Afghanistan.
Lord Robertson, after saying that the US evidence proved Bin Laden was behind the attacks, formally invoked Nato's Article Five, which treats an attack on one member as an attack on all.
But the BBC's defence correspondent, Jonathan Marcus, says that while Nato members are now obliged to give any assistance the US requests, in practice there will be no military response from Nato.
Since the 11 September attacks, the Pentagon has sent more than 100 additional air force planes to bases in Saudi Arabia, Kuwait, Bahrain and other Gulf nations.
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