As Tony Blair prepares to step down from office next Wednesday to make way for Gordon Brown it has emerged that George W Bush, the US President, has raised the possibility of appointing him to a peace-making role in the Middle East.

Mr Blair's official spokesman last night insisted there was much speculation, and that nothing had been tied down, but he did not deny that there was substance to the suggestion.

In the US, the White House indicated that an announcement could be imminent. Spokeswoman Dana Perino said: "Obviously Prime Minister Blair has been very active and deeply involved in Middle East peace issues throughout his prime ministership. It would not surprise me if they have talked about what Prime Minister Blair would like to do following the end of his term but we don't have anything to announce today."

Earlier the Al Jazeera news channel claimed Mr Blair was set to be installed as envoy for the Middle East quartet, compromising the US, the United Nations, Russia and the EU.

In another development about Mr Blair's future it emerged yesterday that he was planning to set up a sports foundation when he steps down as Prime Minister.

According to John Burton, his constituency agent, the Blair Foundation sport project will be based at his Sedgefield home, Myrobella House, and will tap into the expertise of such North East sporting legends as Brendan Foster and Steve Cram. Downing Street has refused to comment on any of Mr Blair's retirement plans but the charitable foundation was welcomed. Peter Slater, of North East Sport, a multi-agency initiative to promote sport in the region, said: "I think it's remarkable and I think its impact will be very wide."