Gordon Brown has delivered a stern message over inflationary pay demands.

Addressing the TUC's annual congress the chancellor warned unions that they must act responsibly over pay.

His warning follows record pay demands from unions representing workers in the fire service and the post office.

"Here in Britain, despite the global slowdown. because of the tough decisions we have made together, we have not only reverted recession. we have had the longest and most continuous recession free growth for 30 years," he said.

"We will not yield to inflationary pressures, any unaffordable demands or any short-term quick-fixes or soft options that would risk or squander the huge economic opportunities that our new-won and hard-won stability offers the British people.

"I have also to make it clear that as long as I am chancellor there will be no return to the mistakes that past Labour and Conservative governments have made.

"There will be no gambling with stability. there can be no return to inflationary pay rises. and there can be no going back on demanding value for money as well as equity in our public services."

Brown also used his keynote speech to list a series of pro-union Labour reforms. And he claimed that Labour's progress would be reversed by the Conservatives.

The minimum wage, tax credits and record public spending were Labour achievements of which unions should be proud, he said.

The chancellor also announced that new rights at work for 16 and 17-year-olds would be unveiled shortly.

A new statutory pension protection fund would be established to protect workers' savings, the TUC conference was told.

"I commit this government to securing an end, once and for all, to pensioner poverty," he said.

Breaking a summer of conspicuous silence, the chancellor's words were also watched carefully for references to the prime minister's problems on Iraq.

Tony Blair had his "complete confidence" over the conflict, he said in his first public speech since June.

And he praised Blair's "strong leadership" on the economy.

"We have increased jobs, not just with thousands more in the private sector, but in the teeth of Conservative opposition we have done so in our public services, tackling decades of chronic under-staffing in our health and social services, schools and colleges and caring services," he said.

"We will not rest or slow our efforts until we have ensured a Britain of greater opportunities and greater security not just for some but for all."

He also pointed to Labour's record in areas such as job creation and family friendly hours.

"It is because we insisted on building solid foundations, I can tell you that Britain now has the lowest unemployment since 1976," he said. "More people are in work than at any time in this country's history.

"Remember Michael Howard saying that the minimum wage would cost Britain one million jobs. We have a minimum wage and we have created one million jobs.

"My goal is that Britain can lead in the new global era as the first economy to combine a full employment enterprise economy with a fair society, founded on free public services based on need not ability to pay."

Brown began by paying tribute to his close ally Sir Bill Morris, the outgoing general secretary of the TGWU.

"Bill has fought against racism and discrimination both nationally and internationally for over 30 years," he said.

And he promised to move 20,000 government employees out of Whitehall and into the regions.

Aside from his call for "value for money" in public sector spending, Brown barely broached the thorny subjects of foundation hospitals or university top-up fees.

He did urge delegates to "support modern funding systems for our schools and universities" but shied away from expanding on the two areas of government policy over which he is thought to have doubts.

The chancellor concluded with a further call for stability and restraint alongside an uplifting message of confidence in the economy's prospects.

"Let us never forget the lesson that the foundation for what we do is our ability to secure economic stability and growth, our ability to create full employment," he declared.

"Six years into this government I am more confident than ever that building on the strong economic foundations we have been creating together we can, with continued discipline, not only create full employment but eradicate child poverty, extend educational opportunity for all, ensure all pensioners dignity in retirement, meet our responsibilities to the poor of the world and build prosperity, not for some but for all."