May 10 (Bloomberg) -- Tony Blair will today announce his plan to retire as U.K. prime minister once the ruling Labour Party has selected a successor, likely to be Chancellor of the Exchequer Gordon Brown.

Blair, 54, traveled to the Trimdon Labour Club in Sedgefield, his constituency in northern England, after he held his weekly Cabinet meeting in London. He will make a statement around midday local time, according to party officials who declined to be identified.

``It's the starting gun for Gordon to prove himself as an independent leader,'' said Patrick Dunleavy of the London School of Economics. ``It's an epoch change in British politics.''

Blair said in September he would retire within a year, abandoning plans to serve a full third term in office as opposition to the Iraq war threatened to provoke a rebellion in Labour ranks. The party's standing in polls remains close to a 20- year low, and rival parties beat Labour candidates in local elections in Scotland, Wales and England last week.

Bookmakers are so confident Brown, 56, will succeed Blair that Ladbrokes Plc yesterday said it will start paying out to people who had bet on him. Even if he is the only candidate, he will not be confirmed as party leader until the end of Labour's seven-week election process, likely to finish at the end of June.

Blair said May 1 that Brown would make a ``great prime minister.''

`The Living Dead'

David Cameron, leader of the Conservative opposition, said yesterday that Blair's government was paralyzed while it awaits a successor. ``This is the government of the living dead,'' Cameron said in Parliament at the prime minister's question time.

Blair's spokesman, Tom Kelly, said his boss was still fully engaged with his job. ``Tomorrow is a party matter,'' he told reporters in London yesterday. ``Whatever the prime minister announces about his intentions as party leader doesn't affect his position as prime minister.''

``I will tell the right honorable gentleman on what I shall concentrate in the next seven weeks: policy on the economy, health, education and law and order,'' Blair said in reply to Cameron's barb.

Brown has served as Blair's finance minister since 1997 and remains the only Cabinet minister to express his ambition to take over. Environment Secretary David Miliband and Home Secretary John Reid have backed away from a leadership bid.

1994 Agreement

Brown stood aside for Blair to become Labour leader in 1994. Three years later the party was swept to power in a landslide victory, ending 18 years of Conservative rule under Margaret Thatcher and then John Major.

In government, the relationship between Blair and Brown has been dominated by media reports of tensions over the control and direction of policy and when Blair would step down.

``Can I welcome the chancellor on what must be one of the happiest days of his political career,'' Conservative Treasury spokesman George Osborne said during questions to Brown in Parliament today.

After Thatcher, Blair is the longest-serving prime minister since Robert Gascoyne-Cecil, a Conservative who held the title of the Marquess of Salisbury. Lord Salisbury governed for 13 years between 1885 and 1902.

Blair is likely to remain the legislator for Sedgefield, a seat he has represented since 1983, ``for the next two or three years,'' his agent John Burton said in an interview. There has been speculation that Blair will quit as a lawmaker before the next election, which has to be held by June 2010 at the latest.

``He is a really good man. He has not changed at all as a person. He will go on to change things on the international stage after this,'' said Labour Party activist Maureen Lenehan, wearing a badge with Blair's face on it. ``The best memory of him is winning the first general election. I was 10-foot up there.''

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net

Last Updated: May 10, 2007 06:28 EDT