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In a long-awaited statement, the republican organisation said it would follow a democratic path ending more than 30 years of violence.
Sinn Fein President Gerry Adams said the move was a "courageous and confident initiative" and that the moment must be seized.
Prime Minister Tony Blair said it was a "step of unparalleled magnitude".
"It is what we have striven for and worked for throughout the eight years since the Good Friday Agreement," he said.
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