Mr Blair said Britain would have to decide on its place in the world

In a major speech, he said the war on terror may last a generation but to retreat would be a "catastrophe".

And Britain must be ready to fight wars as well as keep the peace.

He also admitted the army was doing more overseas than planned and there were "real problems" with accommodation for military families.

The prime minister said Britain and the world faced a "new and different" security challenge following 11 September 2001.

And Britain had to choose whether it wanted to be in the front line of the global fight against terrorism, or retreat to a peacekeeping role.

Terrorism cannot be defeated by military means alone, but it can't be defeated without it

"My choice is for armed forces that are prepared to engage in this difficult, tough, challenging campaign, to be war fighters as well as peacekeepers," he told an audience of academics and military commanders in Plymouth.

He said he wanted to see "a British foreign policy that keeps our American alliance strong" and "for us as a nation to be as willing to fight terrorism and pay the cost of that fight wherever it may be".

But he also acknowledged that Britain's armed forces were under strain fighting twin campaigns in Iraq and Afghanistan.

'Unnerved'

"It is true that operational commitments are at a higher level than originally planned. Service personnel are working harder and for longer than intended," he said.

And although he believed the condition of service accommodation had been "exaggerated," resentment over it was more "raw" among the military because of what was being asked of them.

"The extraordinary job that servicemen do needs to be reflected in the quality of accommodation provided for them and their families, at home or abroad," said Mr Blair.

Mr Blair admitted public opinion was divided over Britain's military campaigns and "unnerved by the absence of victory" in its traditional form.

'More dangerous'
But he argued against political disengagement and said that Britain must be prepared to fight for its values.

"Terrorism cannot be defeated by military means alone, but it can't be defeated without it," said Mr Blair.

That meant defence spending would have to increase and the country would have to accept new realities about the nature of the fight.

"On the part of the military, they need to accept that in a volunteer armed force, conflict and therefore casualty may be part of what they are called upon to face.

"On the part of the public, they need to be prepared for the long as well as the short campaign, to see our participation alongside allies in such conflict not as an atavistic, misguided attempt to recapture past glories, but as a necessary engagement in order for us to protect our security and advance our interests and values in the modern world."

Commenting on Mr Blair's speech, former Labour Cabinet minister Clare Short - now an Independent MP - agreed there was an urgent need for "a serious debate about Britain's role in the world".

But she said Mr Blair's decisions had "made the world much more dangerous, much more divided".

Scottish National Party leader Alex Salmond also argued that Mr Blair had made the world "a more dangerous place" and said the prime minister was "clearly trying to foist that legacy onto his successor".