The historic handshake between the Queen and Sinn Fein's Martin McGuinness, together with his words of blessing as they said goodbye, have been hailed as a watershed moment for Anglo-Irish relations.

The encounter between the former IRA commander - now Northern Ireland's Deputy First Minister - and the Queen was unthinkable a little over 10 years ago.

But the success of the peace process and the Queen's acclaimed visit to the Republic of Ireland last year, when her conciliatory words and gestures won over many critics of the monarchy, paved the way for their meeting.

The Queen and Mr McGuinness first shook hands away from the media spotlight behind closed doors at a cultural event in Belfast's Lyric theatre.

But as the Queen left the venue they shook hands again, this time in public, as Mr McGuinness offered parting words in Irish and told her the phrase meant: "Goodbye and God's speed."

During their initial private meeting the Deputy First Minister is said to have commented briefly on the Queen's visit to Dublin last year, and in particular the comments she made at the time recognising all the victims of the conflict.

A Sinn Fein spokesman said of their conversation: "He emphasised the need to acknowledge the pain of all victims of the conflict and their families."

Mr McGuinness is said to have spoken to the Queen of the significance of her visit, and of the need for it to be built upon in the time ahead.

The party said Mr McGuinness told the Queen that their meeting was a "powerful signal that peace-building requires leadership".

Their historic first meeting took place in a room within the Lyric theatre during an event celebrating the arts in the Republic and Northern Ireland.

The meeting lasted about five minutes in a quiet space used by the Lyric for creative learning.

They were joined by the Duke of Edinburgh, Northern Ireland First Minister Peter Robinson, Irish President Michael D Higgins and his wife Sabina.

The McGrath Suite - named in honour of benefactor Harvey McGrath, former chairman of British insurer Prudential, and his wife Allison - is usually filled with toddlers enjoying story-telling sessions or drama students taking part in workshops.

But today it was sparsely furnished with leather seating - four chairs and a sofa - set around a circular wooden table decorated with flowers, with tea, coffee and still and sparkling water on a side table.

The floor-to-ceiling windows looking out on to landscaped gardens and the River Lagan were covered with curtains.

The Queen emerged from her meeting to view a series of large portraits in the theatre and meet artists associated with Ireland's cultural life.

Later the Queen left to continue her Diamond Jubilee tour of Northern Ireland, with a visit to the Titanic Belfast attraction and a special party at Stormont.

As he left the venue, Mr McGuinness, who has been accused by hardline critics of compromising his beliefs by meeting the monarch, told reporters: "I am still a republican."

Asked what it was like to meet the Queen, he added: "Very nice."

Peter Sheridan, of the Cooperation Ireland charity that organised the event at the Lyric, said it was an example of peace-building.

He said of the mood: "It was a very relaxed atmosphere, the very ordinariness of it, even if it was not ordinary people."

Mr Sheridan highlighted the importance of the encounter: "It is certainly a seminal event between people on this island and between these islands."

Renowned poet Michael Longley was at the event, and said of the handshake: "I think it's very significant. To dismiss this as theatrical is nonsense - a handshake is a handshake, no matter who you are.

"I think it carries on from her visit to the Republic and the fact that she met Mr McGuinness, who has made a huge contribution to the peace process, is very important."

Mr Higgins said the handshake was of symbolic importance.

"The exchange of greetings and courtesies that took place this morning marks another important step on the journey to reconciliation on this island," he said.

Northern Ireland Secretary Owen Paterson said: "This will move Northern Ireland on to a whole new plane. After all the trauma of Northern Ireland, everyone is looking forward."

Former prime minister Tony Blair, who oversaw the Good Friday Agreement, welcomed the Queen's handshake with Mr McGuinness but noted how the encounter was difficult for the royal family given the IRA murder in 1979 of Lord Mountbatten.

"I think it is fantastic that we have come so far," Mr Blair said. "The Queen's is a magnificent gesture and thoroughly typical because it must be very difficult for her - it is a sign of how much has changed."

Sinn Fein president Gerry Adams said: "I think the significance will be seen in how much we can build upon it.

"I think the vast majority of unionists will be pleased that this happened because they know it's essentially a real gesture, beyond the rhetoric, towards their sense of identity and their sense of allegiance."

The Queen ended her two-day visit to Northern Ireland by appearing at a party held in her honour in the Stormont estate which was attended by 20,000 people.

The flag-waving crowd was treated to the sight of the Queen and the Duke of Edinburgh arriving in an open-top car, before they were greeted by First Minister Peter Robinson and his wife Iris.

The Queen then left the Stormont estate, bringing her historic trip to a close.