Mr Blair addressed the Labour Party's annual conference as leader for the last time and called for the healing of divisions within his party.
Last month the ruling party was rocked by a rebellion of Labour MPs that forced him to pledge to step down within a year.
"The truth is you can't go on forever. That's why it's right that this is my last conference as leader," Mr Blair said.
"I will try to help build a unified party with a strong platform for the only legacy that has ever mattered to me - a fourth term election victory that allows us to keep on changing Britain for the better," he said.
Mr Blair was rewarded with a rousing send-off as the party rank-and-file put aside their past criticisms to give him a seven-minute standing ovation.
Popularity waning
During the speech the British Prime Minister also defended the centrist policies he has followed in nine years in power.
He also said the party had to face up to global challenges such as climate change and terrorism.
Mr Blair, US President George W. Bush's closest ally in the Iraq war, has been Labour's most successful leader, winning three general elections in a row. The next is expected in 2009.
However, his popularity in the country has waned over his commitment to the US-led Iraq invasion, his policies in the Middle East and his pro-market reforms.
Brown speech
Mr Blair, Chancellor of the Exchequer Gordon Brown, his expected successor with whom he has a troubled relationship, but stopped short of endorsing him as future leader.
"I know New Labour would never have happened and three election victories would never have been secured without Gordon Brown," he said.
Mr Brown has been accused of attempting to hasten Mr Blair's departure.
The day before, Mr Brown gave a confident speech which won over some activists concerned by his poor opinion poll showings against the resurgent Conservatives.
Labour hoped the Manchester rally would draw a line under infighting over the succession but a reported slur by Mr Blair's wife Cherie against Mr Brown threatened a fragile truce on Monday.
A news agency report said she had accused Brown of lying when praising Blair yesterday, although she denied saying it.
Mr Blair drew roars of laughter from the packed conference hall by joking that at least he would never have to worry about his wife running off with the man who lives next door.
Mr Brown lives next to the Blairs in Downing Street in London.