Sportal.co.nz 23.Feb.2014Getty Images
After a loss and a win in their opening two fixtures, England played their first match of the campaign at Twickenham against Joe Schmidt's side, and ran out 13-10 victors to end Ireland's hopes of a Grand Slam.
Ireland had led 10-3 after Rob Kearney touched down early in the second half, but a penalty from Owen Farrell and a converted Danny Care try threw the race to be crowned champions wide open, with four teams now on four points.
And Lancaster believes his young side have taken a 'significant' step in their development, although that will count for nothing unless they follow up with a win against Wales in their next fixture.
"It was a very significant win for us," he said. "There would have been ramifications if we had lost a championship match at home and we were up against a good, experienced side.
"It was a big step in the right direction with the players showing great character, spirit, belief and heart.
"It will count for nothing if we do not follow it up against Wales in two weeks, but we will take a lot of confidence from winning what was a proper Test match.
"The way we defended in the final 10 minutes as Ireland came at us showed how a young group of players is growing up.
"The big thing was that we did not panic when Ireland started the second half strongly and hit back with an excellent try.
"It is all set up for another great game against Wales and it has turned into a superb tournament with the title very much up for grabs."