Blair will hand power to Brown 'within two years'.

Byline: BY JAMIE LYONS Daily Post Correspondent

TONY BLAIR has reached "a new understanding" with Gordon Brown that will see him take over as Prime Minister within two years, David Blunkett said today.

The Prime Minister has anointed the Chancellor as his successor, but refused to say exactly when he will hand over the keys to Number 10.

Mr Blunkett signalled they had come to an agreement that would see Mr Brown take over in a year or two.

"My sense is that there is a new understanding, yes," he said.

"So good on them. And whether it is a year or two years, it actually will be a sensible process of combining the talents that we have."

Mr Blunkett told the BBC's Sunday AM programme: "It is good because anybody with any ounce of understanding of politics knows that when Tony Blair and Gordon Brown work together we are a winner, and when they are divided our opponents can divide us and it is as simple as that."

Mr Blair has made it clear he will stand down before the next election, although he has insisted he will serve a full third term.

He has said there will be no early handover to Mr Brown. But just this month he said he was "absolutely happy" that the Chancellor would succeed him.

Mr Blunkett said it was "self-evident" that Mr Brown would take over from Mr Blair.

The Chancellor's allies have been pushing for an early transition of power. Mr Blunkett's comments are the clearest indication yet that Mr Brown could be given the job well before the next election.

The former education secretary also said there was "a real possibility" of Mr Blair finding a "way forward" over controversial school reforms.

The Prime Minister is facing opposition from about 100 Labour MPs and senior party figures who fear poor children will lose out under the plans.

Mr Blunkett said there could be a compromise over school admissions.

And he acknowledged the reforms were pivotal to Mr Blair's authority.

"We are not simply dealing with a set of measures, important as they are ... but we are actually dealing with a seminal moment in politics," he said.

"I think there is a real possibility of a way forward."

Mr Blunkett said it would be a mistake to tell opponents - as Education Secretary Ruth Kelly has done - they did not understand the measures.

"We mustn't say to people 'if you only understood, you would be smarter and you would be as good as us'.

"What we have got to say is 'let's work this through together'."

He said a compromise lay in the admissions code. He said it was not possible to write all 76 pages of the code into law. But he said the requirement that schools "have regard to" the code could be replaced with a provision saying schools had to take it into account.

He said the Prime Minister could live with such a compromise, and that he was right to push ahead with his wider reform agenda.

OPINION: PAGE 10

CAPTION(S):

New understanding: Gordon Brown is to take the reins from Tony Blair within two years' David Blunkett yesterday