Prime Minister Tony Blair distanced himself from 1970s-style employment laws and steered a course for an internet-friendly future, in a bid to repair a cooling relationship with industry chiefs.

Speaking hours after a public spat between Trade Secretary Patricia Hewitt and Confederation of British Industry chief Digby Jones, Mr Blair praised the organisation's work in promoting business and national interests.

He eased concerns raised by Mr Jones over recent days that UK firms would collapse under a raft of new employee-protection measures.

"There will be no new ramp of employment legislation taking us backwards to the 1970s," he told the CBI's 25th annual conference.

And he promoted the importance of high-speed, or broadband, internet services, whose slow roll-out in Britain has raised widespread concerns.

'Potential to revolutionise'

"We are in the early days of broadband, but it has the potential to revolutionise many aspects of our lives," Mr Blair said.

Beside boosting the productivity of UK firms, it could open up fresh markets, and conquer a geographical divide between town and country economies.

"Geographical location will no longer be a restriction to competing with urban rivals."

The government is to review its own technology purchasing arrangements for ways to support broadband.

This is in addition to measures to promote competition and set up "effective" regulation needed to "advance broadband in Britain".

The comments followed a speech from e-Envoy Andrew Pinder on Monday morning urging business support for broadband measures in the face of scepticism from parts of government.

"I absolutely welcome the prime minister's speech," Mr Pinder told BBC News Online.

"It is good to see the prime minister retate his commitment to new technology."

Railtrack pay-offs

Mr Blair also confirmed that the government had climbed down from a tough line taken over pay-offs for Railtrack shareholders following the collapse of the rail infrastructure firm.

"Shareholders will receive what they are entitled to," he told the conference.

"We have secured the position of lenders, creditors and employees."

He supported the decision of Transport Secretary Stephen Byers to force the Railtrack debacle.

"The simple truth is that we could not justify pouring ever more public money into a business that was a going bust and failing to deliver," Mr Blair said.

Passengers and rail chiefs could look forward to a service-focused industry, overseen by "simplified regulation".

And he further quashed speculation that the Railtrack crisis would prompt an end to plans to contract private firms to help run London Underground.

"The investment is there for the future of the underground too. What we need is a structure that delivers for both services."