Britain has about 5,000 troops in Afghanistan, part of a 31,000-strong NATO-led force battling a revitalized Taliban, who benefit from sanctuaries on the Pakistani side of the lawless frontier.
'A Difficult, Global Struggle'
Blair described the battle against insurgents in Afghanistan as part of "a difficult, global struggle" with "many different aspects" -- one of the others being "what is happening here in Pakistan."
The two leaders pledged to continue to work closely together to combat terrorism and religious extremism, and Blair also announced that Great Britain will double its aid to Pakistan over the next three years, from $446 million to $907 million.
Officials said that a large portion of the funds will be spent on developing the Pakistani security services, and countering extremism in Pakistan's Islamic religious schools.
Blair praised Pakistan's cooperation and efforts to create an alternative to extremism.
However, Pakistan has regularly been criticized for not being active enough in combating the Taliban on its territory.
Musharraf used the meeting to reject those criticisms, noting that Pakistani forces have lost 600 men in fighting in the tribal areas bordering Afghanistan.
Pakistan's cooperation in cracking down on cross-border infiltration by Taliban militants is seen as critically important for the success of U.S. and NATO military operations in Afghanistan.
A Marshall Plan
Musharraf added that military force alone cannot solve the problems Afghanistan that faces.
"The other element is reconstruction and development," he said, arguing that "a massive influx of development funds" is needed, calling for "some kind of a Marshall Plan," a reference to the U.S. program that spurred Europe's economic recovery after World War II.
Musharraf said "billions of dollars" are needed.
Musharraf also noted that the fight against extremism is impossible to win without solving the Palestinian conflict.
Blair said global terrorism is based on an ideology that exploits grievances, saying that "trying to make progress in the Middle East in respect of Israel- Palestine also has an impact on all these broader issues."
The issue of rebuilding Afghanistan was the centerpiece of a regional conference that ended on November 19 in the Indian capital, New Delhi.
Afghan President Hamid Karzai told the conference on November 18 that instability in Afghanistan posed a threat to the wider region. Karzai called for more international assistance to fight Taliban insurgents. Indian Prime Minister Manmohan Singh echoed Karzai's concerns, saying peace in Afghanistan is essential for regional and global security.