British Prime Minister Tony Blair arrives in Auckland late this afternoon from Australia where he told a joint sitting of the Parliament that the war against terrorists was as much a battle about values as it was about arms.

Mr Blair said the struggle facing the world today was not just about security.

It was also "a struggle about values and modernity, whether to be at ease with it or enraged at it".

Mr Blair, who will be in Auckland for a 24-hour visit, is the first British Prime Minister in 48 years to make an official visit to New Zealand.

Conservative Prime Minister John Major attended the Commonwealth Heads of Government in 1995 but that was not a bilateral visit.

Mr Blair, and his wife Cherie, could face anti-war demonstrators at his first official function tonight, hosted by Prime Minister Helen Clark and the Auckland Regional Chamber of Commerce and Industry.

His itinerary will also take in a harbour cruise, a visit to a winery and a school as well as formal bilateral talks tomorrow.

He and Helen Clark will discuss a proposal to set up an annual security dialogue, Helen Clark said yesterday.

They would also look at further co-operation between New Zealand Trade and Enterprise and the UK's Department of Trade and Investment.

And they would also advance an initiative to set up a unit in the public service to enable their respective Labour Governments to co-operate more closely on policy development.

She said Britain had been interested in New Zealand's work-based Kiwisaver scheme and work being undertaken on the single benefit.

New Zealand was interested in Britain's shared equity scheme for home-ownership and moves to get greater productivity in the National Health Service.

Education Minister Steve Maharey has already dismissed from New Zealand Labour's policy repertoire the adoption of Mr Blair's controversial education reforms.

Helen Clark said the policy unit would be in the public service rather than between political parties but she was not sure it would survive the election of new Governments in either country.

"There is a lot of interest in each country in policy development in the other and whether or not that interest transcended to other Governments at other times is for other Governments at other times."

New Zealand Labour was barely five months into its third term and British Labour was only 10 months into its third term and was "wrestling with a lot of similar issues".

She hoped Mr Blair's trip would not be overshadowed by the controversy at home over his nominating for the peerage several businessmen who had lent Labour money for its 2005 campaign.