Addressing both Houses of Parliament, Mr Higgins spoke of "mutual respect" between Britain and Ireland
Irish President Michael D Higgins has spoken of his country's "deep and enduring" friendship with Britain.
But he said there was "still a road to be travelled" to reach lasting peace.
Earlier Mr Higgins met the Queen and visited Windsor Castle, and he will return there later for a state banquet.
In his speech to both Houses of Parliament in the Palace of Westminster, he said: "I stand here at a time when the relationship between our two islands has, as I have said, achieved a closeness and warmth that once seemed unachievable."
Mr Higgins spoke of the "pain and sacrifice" associated with Irish independence from the UK in 1922, which he said cast a "long shadow across our relations".
Both the UK and Irish national anthems were played as the president arrived at Windsor Castle
His trip comes after the Queen became the first British monarch to visit the Republic of Ireland three years ago.
Then Sinn Fein did not take part, but Northern Ireland's Deputy First Minister Martin McGuinness, a former IRA commander, will attend the banquet hosted by the Queen later.
President Higgins meets Prince Charles and the Duchess of Cornwall at the Irish Embassy in London
Crowds cheered the carriage carrying the Irish president to Windsor Castle
Mr Higgins was greeted at the Irish embassy in London earlier by Prince Charles before heading to Windsor where he shook hands with the Queen and Prince Philip.
During his visit, which ends on Friday, he is
also due to meet Prime Minister David Cameron at Downing Street, pay
tribute to the work of Irish health professionals, and meet business
leaders and London Mayor Boris Johnson.
The statesman, who came to England to work as a waiter when
he was 21, said his visit would be "very important for the relationships
between the people of Ireland and UK".He will be joined on the trip by Taoiseach Enda Kenny and Foreign Affairs Minister Eamon Gilmore.
BBC Ireland correspondent Andy Martin said the trip could not have happened 20 years ago because of "lingering acrimony" between the two countries.
Our correspondent added that "changed entirely three years ago", when the Queen laid a wreath at a memorial to those who died fighting for Ireland's independence.
At the scene
Thousands of people waving Union flags and Irish tricolours looked on as President Higgins and the Queen passed by in a horse-drawn carriage.Some of them were locals - others tourists and one or two Irish people in their county GAA jerseys.
One man from County Kerry, who has lived in London for 25 years, came to Windsor and said "It's a great day, it's time to move on and normalise relations."
Earlier the Queen - not wearing green for this Irish-themed state visit - welcomed the President on the Royal Dais which had bouquets of flowers - white roses and orange lilies.
Mr Higgins and the Duke of Edinburgh inspected British soldiers at Windsor Castle
The Queen set another historic precedent two years ago when she shook hands with Mr McGuinness during a trip to Belfast.
Conor Murphy, a Sinn Fein MP and former IRA member, said the president's visit was a "symbolically significant step" on the "journey towards reconciliation and better relationships".
But in a sign of the tensions caused by Sinn Fein's participation in some of the events, Stephen Gault - whose father was killed by an IRA bomb in 1987 - accused republicans of trying to "airbrush" history.
"How can I forgive somebody who hasn't turned around and asked for my forgiveness?" he said of Mr McGuinness on BBC Radio 4's Today programme.
More than 3,600 people are estimated to have been killed during the troubles between 1969 and 1998.
For centuries Ireland was under British or English rule and the more recent troubles can be traced back to the partition of the country.
Ireland won independence following a civil war and guerrilla campaign against British forces.
But six counties were kept under British control, creating Northern Ireland.President Higgins said before his visit that there were "a lot of very difficult memories" and that it would be wrong to "wipe the slate clean".
Asked about the Northern Irish peace process, he said: "Affecting a kind of amnesia is of no value to you, you are better to honestly deal with our facts that are standing behind you as shadows.
"How could I say to any family whose family member might be in a wheelchair or somebody who is dead, you must put it behind you?"
Meanwhile Peter Hain - Northern Ireland secretary from 2005 to 2007 - suggested there should be no more prosecutions for offences committed before the 1998 Good Friday Agreement.
He said his proposal was not an "amnesty", but "perhaps some special judicial process" where people could come forward and admit crimes but not be sentenced.
Mr Hain said the state visit by Mr Higgins was "hugely significant" and would have been "unthinkable" just five years ago due to the "troubled and tangled" history between the countries.
Analysis
The return leg of the Queen's enormously successful tour of Ireland means there will be no more "firsts" in the attempt to make Ireland and Britain normal neighbours.When Sinn Fein say Martin McGuinness may go to the Windsor Castle ball, and start talking about the Queen in terms of her contribution to peace, it is a clear indication that relations have changed massively.
The Republic of Ireland's Prime Minister Enda Kenny acknowledges that this visit could not have occurred 20 years ago, such was the lingering acrimony over Britain's role in Ireland, and the IRA's attacks in Britain.
All of that changed entirely three years ago when the Queen did not just acknowledge that emotive history, but faced into it by laying a wreath at a memorial to those who died fighting the Crown for Ireland's independence.
Mr Higgins will struggle to match that symbolism, or indeed the obvious friendship that developed between his predecessor Mary McAleese and the royals in 2011. However, his role in London is designed to break the idea that such a visit is unusual.
Mr Higgins, himself a poet and a migrant worker in England in his youth, will be keen to emphasise those things that tie the counties together, rather than the issues that have so brutally divided them.
The handshake between Martin McGuinness and the Queen in 2012 was a watershed moment
Mr Higgins has been a stalwart of Irish public life, as a politician, poet and the subject of songs.
In an interview with the BBC's Fergal Keane on the eve of the visit, the president was asked if he would bring a gift for the Queen.
"Oh yes," he said. "Something equine, something cultural. The warmth around this visit has been tremendous."
The president and his wife Sabina are expected to fly back to Dublin on Friday afternoon after a week of engagements.
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