British reaction: Things can only get better, Tony Blair promised Britain eight years ago. Yesterday, in Trafalgar Square, amid scenes the likes of which Londoners had not seen since VE Day and, probably, since Nelson's victory over the French in 1805, it felt as though they finally had.

"What's your message for Trafalgar Square?" gushed the presenter Katy Hill, speaking to the prime minister by live satellite feed from the G8 summit venue at Gleneagles in Scotland minutes after the announcement of London's victory.

For a second Blair seemed at a loss. Either that or, like much of the crowd gathered on the steps of the National Gallery, he had not allowed himself to consider the possibility London might actually win.

"Well done," he said, eventually. Then, finding the right words: "And make 2012 the greatest Games the world has ever seen."

That was the point at which the dam burst. On cue, red, white and blue confetti shot from a series of guns positioned at strategic points of the square, showering Kelly Holmes, Donna Fraser and the other London 2012 ambassadors gathered at the foot of Nelson's column. The next instant the Red Arrows streaked overhead, trailing smoke of the same patriotic hue.

The builders on the National Gallery, who downed tools from erecting scaffolding for the coming Degas exhibition, loved it. Even Marc Roche, the London correspondent of Le Monde, had to admit the French had been defeated by superior presentation.

"You Anglo-Saxons are extremely good at lobbying, you invented spin," he said, shrugging. "It was our own fault for taking such a modest approach."

That confidence in the inevitability of London's victory, however, was not shared by the members of London's bid team on stage. Even after the announcement that New York, Moscow and Madrid had been eliminated and it was down to Paris and London, the athletes were a bag of nerves.

"This is worse than being on the track," confessed former middle distance runner Steve Cram. "At least on the track you are in control."

"My heart's pounding," admitted Hill, keeping a weather eye on the menacing clouds gathering over the square. "If any members of the IOC are watching at the moment, it doesn't rain very often in London, honest."

As if that was not tempting fate enough, she then invited pop singer Rachel Stevens on stage to perform her new single, which included the line "I've got this feeling that you're taking me under".

In the end, of course, there had been nothing to worry about.

"It's the most sensational feeling," screamed the co-presenter, Margherita Taylor, watching Jacques Rogge, the president of the IOC, mouth the word "London" on the giant screen. "Oh my gawd."

Liz Don Francesco and her husband, Marc, who had rushed across London from the capital's East End with their 10-month-old son, Max, were similarly thrilled.

"The pride it gives everyone is fantastic," Ms Francesco said. "Max will be eight when the games come here. Hopefully, like other East End kids, he'll reap the benefits."

That was a sentiment the prime minister, ever on message, was keen to underline. Thanking Coe and his team for a fantastic presentation, Blair pointed out that it was not just about 2012 but the years afterwards.

But it was British Olympic rower James Cracknell who caught the mood best, telling journalists that the crowd's reaction had given the athletes a taste of what it would be like to compete in London in 2012.

"You could feel the crowd's excitement," he said. "Now we have got to do what we said we would. It's going to be tough, but today has proved we can pull it off."