Prime Minister Tony Blair responded to antiwar critics within his ruling party Tuesday by acknowledging he had been wrong to claim that Iraq possessed weapons of mass destruction. But he insisted that Britain and the United States were still right to topple Saddam Hussein.

Addressing Labor Party members at an annual conference that has been overshadowed by events in Iraq, Blair conceded that his decision to join with the Bush administration in last year's invasion and the continuing military activity had divided his party and the country. Still, he gave little ground to critics, and said "whatever disagreements we have had," we "should unite in our determination to stand by the Iraqi people until the job is done."

Two British soldiers were killed Tuesday morning in an ambush outside the city of Basra in southern Iraq, bringing to 68 the number of British military personnel who have died in the conflict -- 24 from enemy fire and 44 in friendly fire incidents and accidents. Meanwhile, Kenneth Bigley, a British civil engineer kidnapped nearly two weeks ago, remains the captive of Muslim extremists who have threatened to execute him, provoking fears here that they might do so during the conference.

Blair and his supporters have sought to lay the groundwork for an anticipated reelection campaign next spring by shifting the focus of political debate away from Iraq and toward his government's domestic achievements over the past seven years, including its stewardship of Britain's booming economy.

As loyalists chanted "Four more years," Blair appeared on a dais in front of a huge screen pledging "A Better Life for All." Before he spoke, a series of campaign pledges were projected behind him, ranging from achieving full employment in every region in Britain and cutting crime by 15 percent to increasing the number of bicycle lanes. In his speech, he also proposed further tax relief for middle- and working-class families, more vocational training, pension reforms and improvements in education, health and child care.

Still, despite two landslide electoral victories and the economic gains of recent years, opinion polls suggest the government's popularity has eroded steadily over the past 18 months, to the extent that Blair's staunchest loyalists have acknowledged the problem.

"The public haven't walked away from us in terms of values," said Alan Milburn, a cabinet secretary whom Blair has placed in charge of the reelection campaign. "What they need to know is that we haven't walked away from them."

In a speech that appeared to be aimed more at party regulars than the country at large, Blair pleaded for understanding. The prime minister, who came to power preaching a "third way" ideology that sought middle ground between free-market capitalism and social justice, told the delegates he had searched in vain for a middle ground on Iraq.

"There has been no third way this time," he said. "Believe me, I've looked for it."

Before Blair's speech, organizers handed out leaflets demanding, "Just say sorry, Tony." But Blair refused to comply.

"I can apologize for the information that turned out to be wrong," he said, "but I can't, sincerely at least, apologize for removing Saddam. The world is a better place with Saddam in prison, not in power."

Although he made few concessions to critics here who contend he has slavishly followed President Bush's lead on Iraq, Blair offered a foreign policy agenda distinct from Washington's, saying he would make it "a personal priority" to revive the stalled Middle East peace process. He also emphasized action on global warming and on fighting poverty and disease in Africa.

"But understand this reality," he added. "Little of it will happen except in alliance with the United States of America."

Loyalists said they were satisfied with the speech. "I think it went down very well," said David Menon, a parliamentary candidate from the Midlands city of Derby. "He talked positively about the issues that really matter to the people. It will make it easier to go out on the doorstep and campaign."

But critics said the speech had done nothing to heal the party's wounds over Iraq. "There is a fissure running through this conference and through the party, and this speech won't help," said Robert Marshall-Andrews, a member of Parliament. "In a sense, I think he went out of his way to provoke people."

Some were heartened by Blair's effort to quell factional fighting between his supporters and people aligned with his longtime political partner and sometime rival, Gordon Brown, chancellor of the exchequer, the cabinet member in charge of the economy. Blair called Brown, widely seen as his successor, "a personal friend for 20 years and the best chancellor this country has ever had."

Outside the cordoned conference center at this Victorian-era seaside resort, scene of an intense police security operation, thousands of demonstrators protested against the party's plan to ban fox hunting. Inside, one demonstrator was removed after crying out to Blair that there was "blood on your hands" over Iraq. A few minutes later, a half-dozen fox-hunting supporters were ejected after they also shouted at Blair.

The British prime minister, Tony Blair, makes his keynote speech at the annual Labor Party conference. Blair and his supporters tried to shift the focus from his foreign policy to domestic successes.