The individual who holds executive power as head of government in the United Kingdom, being drawn from Parliament. It is generally acknowledged that the first Prime Minister was Robert Walpole in the early 18th century; prior to that power had been shared equally between several cabinet ministers. Walpole was the only senior minister to escape the South Sea Bubble financial scandal and was able to amalgamate the others' responsibilities into his own to achieve supreme power (Lord Mandelson please take note). Originally 'prime minister' was a derogatory term, and it only became official at the start of the 20th century. The PM always holds the formal post of First Lord of the Treasury, and resides at Number 10, Downing Street - though until fairly recently many PMs preferred to actually dwell elsewhere and only have their official residence there.
In the past some PMs have been Lords, but since the First World War or so this would be politically difficult, and nowadays all PMs are drawn from MPs. Formally the PM is chosen by the monarch, but in practice the monarch must choose someone who already has support in Parliament, and nowadays this is simply a rubber stamp for the MP that the governing party has chosen to be their leader.