I tried switching to Google, Comodo and OpenDNS but that didn't help. I would also have thought that if it was a DNS issue then all browsers would have been affected? As I mentioned earlier other browsers worked just fine (other browsers being IE9 and Chrome).
After having done a system restore to a 2 week old config, and as switching DNS, disabling firewall and anti-virus didn't help, I started uninstalling WIN7 updates and that did the trick. Why weeks old updates would suddenly stop Firefox from working I have no idea.
I ran windows update again and reinstalled all the updates. So far FF is still working.
Thanks for all the suggestions.