He has been one of its outstanding modern leaders

Labour Party general secretary David Triesman

His departure after 10 years in the post will come as a blow to Prime Minister Tony Blair who has depended on his support.

But the timing is described as "difficult" by BBC political correspondent Nicholas Jones, coming after a run of clashes between the government and unions over policy.

Tension

Mr Monks admitted that he had his differences with the government, but stressed that this was not the reason why he was leaving.

Speaking in the Times Mr Monks accepted trade unions were challenging the government.

It is never easy, this relationship between the unions and a Labour government

John Monks TUC

"There is a greater tenseness and terseness to the relationship," he said.

He told BBC Radio 4's Today programme on Wednesday: "We have got points of tension and difference with the government.

"But I am clear that in my time as general secretary of the TUC, the best thing that has happened for British workers and for the British trade unions was the election of Tony Blair's government in 1997."

Mr Monks said the unions were "not entirely on board" with the government's reform of the public sector.

"We are not in a perfect harmony, but we are certainly not in the kind of suppressed battle which perhaps one or two more lurid headlines suggest," he said.

"It is never easy, this relationship between the unions and a Labour government."

War of words

Relations between the prime minister and union leader soured earlier this month when Mr Monks labelled Mr Blair "bloody stupid" to ally himself in the European Union (EU) with right-wing leaders like Italy's Silvio Berlusconi over deregulation and a pro-business agenda.

Mr Blair has depended on TUC support

Mr Blair suggested Mr Monks had been "mistaken" in his views - criticising Britain and Italy for blocking any extension of workers rights.

Meanwhile Mr Monks, 56, warned that if workers could not see any employment benefits from the EU they were unlikely to vote for the euro in a referendum.

The trade union leader's relationship with Mr Blair has been put under pressure in recent months over a number of issues amid unrest on the railways and in the post office and concern over moves towards greater involvement of the private sector in hospitals and schools, according to Nicholas Jones.

Moderate leadership

However he said Mr Monks' moderate leadership of the British trade union movement in the early 1990s is credited as having been a key factor in the 1997 General Election.

Mr Monks told Today that he was "excited" by the position in the European TUC, but added that it was not guaranteed that he would get the job.

"I will have done 10 years by the time comes for the election for the next general secretary of the European TUC," he said.

Despite his announcement Mr Monks could stay in his post for a further 18 months.

There has been widespread support already for Mr Monks's bid to become the new leader of the European TUC, which represents trade unions in 34 countries across Europe, Jones said.

Mr Monks is a keen advocate of British membership of the euro and he would put up a strong case for workers rights.

Party tribute

Roger Lyons, joint general secretary of the Amicus union, has said that although Mr Monks had never been frightened to speak his mind, he has not wavered in his support for the Labour government.

The Labour Party's general secretary, David Triesman, paid tribute to Mr Monks.

"John Monks' leadership has led to a renaissance in the TUC.

"He has been one of its outstanding modern leaders.

"Were he to be appointed to carry those skills to the European TUC, we could expect it to modernise and flourish at the heart of the European project," he said.