Tony Blair has vowed to press ahead with controversial public service reforms.

In his New Year message, the prime minister said the government would not back down despite opposition to its tuition fees policy.

And he said that reforms in the NHS were already "paying off".

The prime minister also pledged that he would not "falter with the job only half done".

Blair said the government had already introduced key education reforms.

"In 2004 we will need to take another difficult decision, this time on student finance," he said.

"The more people address the real choices in delivering a fair system of student finance that ensures universities are properly funded in the future, the stronger the support for our proposals.

"We either have a fair contribution from students or we deny opportunities for hundreds of thousands by cutting university numbers, or we raise taxes for everyone including the majority who have not benefited from the higher earning power of higher education.

"I am confident in our plans - free at the point of study, fair at the point of repayment - and believe we will get them through."

And praising health service workers for their role in improving services, the prime minister also pointed to extra funding and the introduction of foundation hospitals as key reasons why the NHS "is doing better and better".

"In 2004 we will extend patient choice further in the NHS so that we give all patients the choices that now only the well off enjoy," he said.

"By the summer every patients waiting six months will have a choice of where to go for treatment in the NHS.

"By the end of 2005 you won't have to wait six months before going to the hospital of your choice, instead you will be able to choose at the point your GP refers you for treatment."

In a year of tough choices, Blair said the decision to go to war with Iraq had been "the most difficult of all".

"The recent capture of Saddam Hussein was a vital milestone on the road to a stable Iraq," he said.

"Meanwhile constant progress on essential services like electricity and water are sure signs that life in Iraq is slowly going in the right direction. In 2004 we must stick to the task."

And reflecting on the concerns that prompted Labour to launch its "big conversation" consultation exercise, the prime minister also said that over the next year everyone involved in politics would face the challenge of creating "a better dialogue between politicians and the people".

"So the coming period is about two things. Driving through existing reforms so that we extend social justice and opportunity. And opening up a genuine dialogue about the future challenges we all face," he said.

"Britain is poised to become one of the most successful 21st century nations.

"And I am as committed, as optimistic, as determined today as I was in 1997 to see through the reforms that will make it happen.

"This is no time to turn the clock back, no time to coast, no time to falter with the job only half done.

"I relish the challenge ahead and I am confident that in partnership - government and people - we can take the next important steps forward in 2004."