The Quartet of Middle East peace negotiators announced Wednesday that its members had appointed Tony Blair to serve as the group's special envoy.

The Quartet, comprising the United Nations, European Union, United States and Russia, issued a statement Wednesday saying the former British prime minister will seek to mobilize international assistance to the Palestinians and develop plans to promote Palestinian economic development.

Blair will also seek international support to address the needs of Palestinian government institutions, focusing as a matter of urgency on the rule of law, said the statement.

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Earlier Wednesday, Blair said in his final question time as British prime minister that Middle East diplomacy must focus on resolving the Israeli-Palestinian conflict.

"The absolute priority in the Middle East is to seek a two-state solution to the Israeli-Palestinian conflict," Blair told Parliament.

Ghazi Hamad, an aide to Ismail Haniyeh, prime minister in the Hamas-led Palestinian government dismissed by Palestinian Authority Chairman Mahmoud Abbas, said the movement did not expect Blair to be even-handed in his new capacity as special envoy.

"Our experience with Tony Blair as Britain's prime minister has not been encouraging. He has always adopted the American and Israeli positions," Hamad said.

Blair left Parliament for the last time as leader Wednesday and headed to Buckingham Palace to tender his resignation to Queen Elizabeth II - following a standing ovation from lawmakers after a decade in power.

A visibly emotional prime minister used his final weekly question session to say sorry for the perils faced by British troops in Iraq and Afghanistan, but gave no apology for his decisions to back the United States in taking military action.

"I wish everyone - friend or foe - well," Blair said before departing the chamber to cheers. "And that is that. The end."

Parliamentarians rose to their feet and gave the outgoing leader rapturous applause as he left the House of Commons chamber to head to a meeting with Queen Elizabeth II. Some, including Foreign Secretary Margaret Beckett, dabbed at tears.

U.S. President George W. Bush paid a final tribute to his ally and will later call Blair's successor with congratulations.

"Tony's had a great run and history will judge him kindly," Bush told Britain's The Sun tabloid in remarks published Wednesday.

"I've heard he's been called Bush's poodle. He's bigger than that."

Protestant firebrand Ian Paisley, the Northern Ireland cleric and legislator who Blair persuaded to work alongside the territory's Catholic minority - achieving peace after decades of bloodshed, also paid tribute in the House of Commons.

The departing prime minister faced another colossal task as a peace envoy, Paisley said, adding he hoped Blair's success in Northern Ireland would be repeated.

Blair took the 1.5-kilometer ride with wife Cherie from his Downing Street office to the palace in a chauffeur-driven, armor-plated limousine known as Pegasus.

The incoming leader, Chancellor of the Exchequer Gordon Brown has been summoned to the queen's private quarters, where she will formally confirm him as prime minister during a closed-door audience.

Blair will later Wednesday travel to northern England, where he has called a meeting with officials in the area he represents to resign as a British legislator, officials said.

Blair: Intense focus on reaching two-state solution necessary
The speculation around Blair's future plans is expected to be laid to rest Wednesday, with his appointment as envoy to the Quartet.

"The Quartet has concluded the elaboration of a mandate for the new representative," Russian Foreign Minister Sergei Lavrov said at a news conference Wednesday in the West Bank city of Ramallah, with Palestinian Authority Chairman Mahmoud Abbas.

"I understand that the decision is about to be announced," Lavrov said.

Blair said his priority in the role would be to effect the current international consensus that a two-state solution is vital to peace in the Middle East.

That meant a secure Israel and a Palestinian state "that is not merely viable in terms of its territory but in terms of its institutions and governance." he said. "I believe it is possible to do that but it will require a huge intensity of focus and work."

Prime Minister Ehud Olmert called outgoing Blair "a true friend of the State of Israel," on Tuesday evening.

An government statement released overnight Wednesday said Olmert called Blair to congratulate him at the end of his term in office.

The prime minister told his British counterpart that should he be appointed as the Quartet's new special envoy to the region, Israel would "cooperate with him to the fullest."

UN representative Michael Williams, Russian Deputy Foreign Minister Sergei Yakovlev, European Union representative Mark Otte and U.S. assistant secretary of state David Welch met on Tuesday for three hours in Jerusalem, mostly focusing on the Blair appointment.

The Quartet representatives were unable to reach an agreement during the Tuesday meeting on the mandate for Blair when he takes up his new post as the Quartet's special envoy for the Middle East peace process.

Officials in Jerusalem said there were disagreements between the U.S. and the UN, which approve of the appointment, and Russia and the EU, who object. The Russians see the appointment as appeasing the Americans, and the Europeans are concerned over possible damage to their status in the peace process.

Blair had "positive" talks with Russian President Vladimir Putin on Tuesday over plans by Middle East mediators to appoint Blair as envoy to the region, his spokesman said on Wednesday.

"It was a very positive discussion ... (about) the meeting of the Quartet," Blair's spokesman said.

The Quartet will ask Blair to work with PA Chairman Mahmoud Abbas to build up institutions needed for a future state, diplomats said.

A Western diplomat said Wednesday that Washington expects the differences to be ironed out in the near future. "Washington believes that the parties will agree and Washington wants to do it [appoint Blair] soon," said a Western diplomat familiar with the deliberations.

The parties agreed Tuesday that Blair's job would be technical, focusing on building governing institutions in the Palestinian Authority, restoring its security forces and assisting the PA finance ministry to develop the economy.

The Quartet wants Blair to operate according to the model of the previous envoy, James Wolfensohn, who coordinated economic and civil matters between the Israelis and the Palestinians in the Gaza Strip before the disengagement. Wolfensohn decided to step down because of the anarchy in the strip following the withdrawal, as well as Israel's lack of cooperation.

The issues are to be discussed Wednesday at the level of foreign ministers to try to bridge the gaps. Israeli officials said agreement and an announcement of the appointment are expected Wednesday, although the problem of the powers that would come with the position still had to be ironed out.