In a keynote foreign policy speech, Mr Blair urged Britons to be vigilant against the high risk of terrorist attack.

He said the threat from Osama Bin Laden's terrorist network remained real and serious.

If.. we were to shut down all the places al-Qaeda might be considering for attack, we would be doing their job for them

Tony Blair

But Mr Blair told his audience at the Lord Mayor's Banquet in the City of London that a balance must be struck between alerting the country to potential dangers and not allowing the fear of terrorism to paralyse society.

"If we acted on every piece of raw intelligence in a way that some were suggesting after Bali, we would in my time as prime minister on many occasions shut down roads, railways, airports, stations, shopping centres, factories, military installations," said Mr Blair.

Dilemma

Mr Blair's speech came amid reports of extra measures being taken to tackle the terrorist threat, such as extra police marksmen being drafted in to boost the armed unit at Heathrow Airport.

Mr Blair's official spokesman said similar warnings were issued last year and that the concern was general in nature rather than specific.

Mr Blair did not outline specific threats in his address.

Airport security is reportedly being tightened

But he said devastating events such as the Bali bombing showed no country was immune from attack.

His message of balance in dealing with such threats reflects the position of the Foreign Office when it faced criticism for not publicising warnings ahead of the Bali bomb.

It said it had only ever had "generic threat information", too vague to warrant sparking alarm amongst travellers.

In contrast, a recent draft Home Office statement released by mistake warned of a possible chemical or nuclear attack on the UK using a "dirty bomb" or poison gas.

Mr Blair reflected on the difficult dilemma of how to issue warnings without causing panic.

Strategy

He said terrorists hoped to inflict damage not just through attacks but by the disruption to society and economies caused by the fear of attack.

What he is attempting to do is alert people without alarming them - that is a very difficult job

Andrew Marr, BBC Political Editor

Mr Blair said: "Where there is specific intelligence about a particular attack, we act to thwart it directly.

"Where we know cells of al-Qaeda are operating, here or abroad, our services are monitoring them, disrupting them, where possible, dealing with those involved; if they are here, imprisoning or expelling them.

"Where there is intelligence suggesting potential targets, we increase surveillance or security as far as we can without causing unnecessary hardship or alarm to the public."

But, he added: "If, on the basis of a general warning, we were to shut down all the places that al-Qaeda might be considering for attack, we would be doing their job for them."

He said the government had to make a judgement on threats "day by day, week by week".

Mr Blair also used his speech to emphasise the need for Iraq to co-operate with weapons inspectors following the passing of the new UN Security Council resolution.

Growing concern

BBC Political Editor Andrew Marr said it was significant that Mr Blair had chosen one of the major foreign policy speeches of the year to highlight the threat of potential terror attacks.

An increase in the electronic "chatter" about al-Qaeda intercepted by security services had led to growing "concern" across Western Europe that "something is in the offing", Mr Marr added.

He said Mr Blair faced a difficult balancing act.

"What he is attempting to do is alert people without alarming them. That is a very difficult job," he told the BBC's Ten O'Clock News.

Opposition reaction

Conservative shadow defence secretary Bernard Jenkin said Mr Blair should have issued a warning of potential terror attacks sooner.

"It has been evident since 11 September last year that a similar attack could be perpetrated on our own country, or very different in nature but very equal in severity.

"And even after the Bali bombings I am surprised that it has taken the prime minister this long to come to terms with that fact," Mr Jenkin told Channel 4 News.

Liberal Democrat leader Charles Kennedy said "the government would be failing in its duties if it did not draw attention to these difficult issues".