Tony Blair has said he is optimistic that there will soon be agreement on a new UN security council resolution on the transfer of sovereignty to Iraq.

The prime minister said there was "common agreement" in the international community on the need for the full transfer of sovereignty.

He was speaking at a press conference in Number 10 following talks with his Spanish opposite number, José Luis Rodriguez Zapatero.

Blair said both governments wanted to work together on a new UN resolution on Iraq.

"I think there is an awful lot that we can work on together," said Blair

"And there is a real and strong common interest between Britain and Spain."

The British premier said cooperation between the two countries would also cover terrorism and spreading prosperity across the EU.

Blair said he was "reasonably optimistic" that the final details on a UN resolution could be agreed "in a pretty short space of time".

Despite expressing strong criticism of the Iraq war, Spain's prime minister said he wanted a "friendly" relationship with the UK.

But he admitted there were "serious differences" on Iraq.

"We agree on things that are extremely important," said Zapatero.

"We agree on strengthening cooperation on combating international terrorism

"We agree on making great efforts to relaunch the peace process through the road map in the Middle East.

"And we are working so the United Nations may obtain a resolution that opens up greater expectations for the Iraq process."

Europe talks

The two leaders had also held talks on plans for a new EU constitution.

Zapatero said he would like to have a deal agreed "as soon as possible".

Earlier on Thursday, Blair used talks with Irish premier Bertie Ahern to press the case for Britain's "red lines" on the European constitution.

The move was being seen as a last-ditch attempt to secure an agreement on the remaining obstacles before European leaders discuss a final draft of the constitution in Brussels later this month.

The prime minister was expected to warn his opposite number, who is the current EU president, that Britain's red line areas must be respected.

He wants to ensure that there are no moves to majority voting on issues such as tax, defence and social security.

Number 10 said the two leaders discussed the forthcoming summit - with Ahern set to continue on a tour of EU capitals over coming days.