TONY Blair told the forum that education was the key to the North-East's future - but although he was addressing the 250 delegates inside Hardwick Hall, his message was intended for his critics outside who accuse him of creating a two-tier education system in which children from poorer backgrounds might get left behind.

"I am restless for change," he said, "not because I do not recognise the huge progress we have made in eight years; not because I want to pick another fight for the sake of it - I have more than enough of them.

"But because while there remain schools - not some, but hundreds of them - where fewer than half the children get the results they need at 16, when, for all the progress, still 17,000 children leave school a year without any qualifications at all, I cannot rest. I will not rest until we do all in our power to change that failure."

He said: "It is a myth that 'middle class' parents aspire and 'working class' parents don't. Indeed, such categorisation is hopelessly out of date: where any longer does the middle class of years ago end and the traditional working class begin?

"Look up the road here at the new housing estate to be built at Fishburn. Where the old cokeworks was, three-bedroom houses are selling for £150,000. The world is changing and quite right too.

"The point is: I want a school system in which middle class and lower income families' children mix happily together; where there are sufficient numbers of good schools to make parental choice a reality; where, if schools aren't good enough, the power lies with people, parents and teachers to effect change."

Drawing on an example set by former Durham County Council leader Mick Terrans, Mr Blair said: "When we make changes that are necessary because the world around us is changing so fast, we don't betray our principles - we fulfil them.

"This country will succeed or fail on the basis of how it changes itself and gears up for this economy based on knowledge. Education is now the centre of economic policy-making in the future. We know what works within our education system, the key is to apply those lessons throughout the education system until the young children growing up in Sedgefield or the inner city urban estates have the chance to make the most of their God-given potential.

"It's the only vision in my view which will work in the 21st Century."