SPECULATION was growing last night that Tony Blair will make his historic announcement about stepping down as Prime Minister in his Sedgefield constituency on Thursday.

It is understood that Mr Blair will tell the Cabinet of his plans to relinquish the Labour leadership on Thursday morning, and he will then travel to the North-East to make the formal announcement to a hastily convened meeting of the Sedgefield Constituency Labour Party. This means that the international spotlight will probably shine on Trimdon Labour Club for one last time.

By resigning as Labour leader, Mr Blair will trigger the seven-week contest to find his successor. When that successor is selected - almost certainly Gordon Brown - he will formally take over as Prime Minister, probably at the end of June.

Yesterday's national newspapers were full of highly colourful and contradictory stories about what Mr Blair plans to do when he is no longer Prime Minister.

Most lurid was the Daily Mail's front-page claim that Mr Blair has fixed a date to resign as Sedgefield's MP - July 23 - in order to "pocket a record £10m in his first year out of office".

This scenario has the Prime Minister waving an immediate goodbye to Westminster to write his memoirs, to take up lucrative directorships and to launch himself on the US lecture circuit.

Other papers said such a move would backfire and make Mr Blair appear greedy as he left behind a bankrupt Labour Party.

Instead, the Daily Telegraph said he would become a "roving ambassador in Africa and the Middle East in an attempt to rebuild his tarnished reputation".

Mr Blair will apparently work for George Bush as a Middle East envoy and run the Blair Foundation to fund humanitarian work in Africa.

The Financial Times said Mr Blair was desperately seeking an "executive role", most likely a new post of president of the European Union , to be created under a partially-revived EU treaty.

However, this job will not be available until 2009 - appearing to allow Mr Blair to serve a full Parliament as MP for Sedgefield, if he wishes.

Mr Blair's increasingly exasperated spokesman said last night: "The reality is that decisions are yet to be made. The Prime Minister is just getting on with the job in hand."