Blair holds talks with Schwarzenegger

Tony Blair has held talks with California governor Arnold Schwarzenegger at No 10 on his last full day as Prime Minister.

Mr Blair, who is set to be confirmed as a Middle East envoy after he steps down as PM, discussed climate change again with the former Hollywood star, following his 2006 visit to Los Angeles.

On Wednesday afternoon, Mr Blair will quit Downing Street and hand over the reins to new Labour leader, Gordon Brown.

Mr Blair has given his strongest indication yet that he is ready to take up his new role as an envoy for the so-called Quartet of the US, EU, UN and Russia which is seeking to establish peace in the Middle East.

Asked about the possible appointment, Mr Blair neither confirmed nor denied it but said he was ready to do "whatever I can".

He said: "I think that anybody who cares about greater peace and stability in the world knows that a lasting and enduring resolution of the Israeli-Palestinian issue is essential. As I have said on many occasions, I would do whatever I could to help such a resolution come about."

If confirmed in his Middle East role - believed to have been backed by US president George Bush and Secretary of State Condoleezza Rice - Mr Blair will play a key peacemaking role in the Palestinian territories.

The position - which has been vacant since former World Bank chief James Wolfensohn quit the post in April last year - is said to be on the agenda for talks in Jerusalem later between US, UN, European Union and Russian officials.

The Chancellor has been challenged by Tory leader David Cameron to hold a snap General Election and a referendum on the EU treaty agreed by Mr Blair in Brussels at the weekend.

Mr Cameron insists Mr Brown has no mandate to become Prime Minister because Mr Blair told voters he would serve a full third term prior to the 2005 contest.

A large-scale reshuffle by Mr Brown is expected to shift most ministers out of their present roles and usher key allies into the Cabinet.

So far, the only appointment announced has been Harriet Harman, Labour's new deputy leader, as party chairman.

On Monday, Ms Harman's first day in the post, she ran into a storm when she was accused of backtracking on demands for the Government to apologise for the Iraq War.

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