David Cameron has pledged to ensure that Britain will remain a "major player" on the world stage.
Delivering his first Guildhall speech on foreign policy, the Prime Minister rejected suggestions that the UK was on an "inevitable path of decline".
He stressed that Britain's position internationally would be undermined unless it succeeded in getting the public finances in order and that it needed to be more "hard-headed" in pursuit of the UK national interest.
"When some people look at the world today they are quick to prophesy dark times ahead; difficulties for Britain. Our foreign policy runs counter to that pessimism. We have the resources - commercial, military and cultural - to remain a major player in the world," he said.
"We are choosing ambition. Far from shrinking back, Britain is reaching out. And far from looking back, starry-eyed, on a glorious past, this country can look forward, clear-eyed, to a great future."
But Labour said Britain had played a diminished role in international affairs since the coalition came to power in May, lacking any strategy for global economic co-operation to ensure the recovery.
"David Cameron is playing the spectator, not the statesman on the international stage," said shadow foreign secretary Yvette Cooper.
"The reality of the Prime Minister's foreign policy so far is a shrivelled role for Britain in the world at the expense of British interests."
Mr Cameron, who has just returned from visiting China and the G20 in Seoul, insisted the UK remained a "great economic power" and that he was determined to ensure that foreign policy would "focus like a laser on defending and advancing Britain's national interest".