"The next party conference in a couple of weeks will be my last as party leader," Blair said in London Thursday, reported Bloomberg News. "I'm not going to set a precise date now. I'll do that at a future date."
Blair's popularity drooped in opinion polls after government scandals over mismanagement were compounded over controversies over his stances on the wars in Iraq and Lebanon, according to Reuters.
His chancellor and immediate successor Gordon Brown said earlier he would support Blair's decision but stressed that it must be in the interest of the party and country.
On Wednesday, eight junior members of the government resigned their posts, saying Blair's leadership was a liability to the party.
Response on the streets of London was mixed, with many saying Blair has served his purpose.
The prime minister's departure "is probably best for the Labour Party because they need a change," said Martin Fry, 48, a public sector worker, quoted Reuters.
He felt Blair had done a largely good job, likening him to one of his most famed predecessors, Margaret Thatcher.
"However, like Thatcher, I think he has come to a point in his political life when he has outlived his usefulness and his purpose," Fry said. "He was the right person at the right time when he came into power but times have changed."
Rod Taite, a 39-year-old fashion photographer, said he felt Blair's nine years in office had been good domestically with improvement in schools and hospitals.
"But in terms of the war in Iraq, his alliance with the U.S. administration has been divisive rather than corrective and it is just going to cause a lot of problems in the future," Taite said, according to Reuters.