When Blake talks about annihilation he is talking about annihilation of the Selfhood. It is an internal activity. It is not accomplished by force or violence but by forgiveness and receiving the Selfhood as a brother. As Blake portrays it, annihilation is not a single event but a way of life. Since the Selfhood continually asserts itself, the process of forgiveness must continually be active.
Blake sees the processes which takes place in the individual as also taking place in the One Man, Albion, who is the body of which we all are part. As the Book of Milton reaches its climax, Milton annihilates his Selfhood as seen in Plate 45. The struggle has been completed, but not in victory of one over the other. The Selfhood has lost its power but is embraced tenderly.
Milton, Plate 39  (E141)
"He [Albion] strove to rise to walk into the Deep. but strength failing
Forbad & down with dreadful groans he sunk upon his Couch
In moony Beulah. Los his strong Guard walks round beneath the Moon
Urizen faints in terror striving among the Brooks of Arnon
With Miltons Spirit: as the Plowman or Artificer or Shepherd
While in the labours of his Calling sends his Thought abroad
To labour in the ocean or in the starry heaven. So Milton
Labourd in Chasms of the Mundane Shell, tho here before
My Cottage midst the Starry Seven, where the Virgin Ololon
Stood trembling in the Porch: loud Satan thunderd on the stormy Sea
Circling Albions Cliffs in which the Four-fold World resides
Tho seen in fallacy outside: a fallacy of Satans Churches
PLATE 40 
Before Ololon Milton stood & percievd the Eternal Form
Of that mild Vision; wondrous were their acts by me unknown
Except remotely; and I heard Ololon say to Milton
I see thee strive upon the Brooks of Arnon. there a dread
And awful Man I see, oercoverd with the mantle of years.
I behold Los & Urizen. I behold Orc & Tharmas;
The Four Zoa's of Albion & thy Spirit with them striving
In Self annihilation giving thy life to thy enemies"
Milton, Plate 45, Blake's Image
Blake left it indefinite exactly who is being portrayed in this picture. Since this whole book is about Milton, the standing man with his feet near the water of the brook is said to be Milton; but it could be Los or Jesus or Blake himself, whose tale is told through Milton. The leaning figure could be identified as Ololon, Milton's emanation; or Urizen; or Satan; or the text suggests Albion as the Fourfold Man. The process portrayed is annihilation, forgiveness, being joined to the Selfhood through recognition or self awareness. Perhaps it is best thought of as breaking out of the limiting walls of the self into the unlimited existence in Eternity through imagination. The forgiveness is mutual, the annihilation is mutual, the release is mutual, the regeneration too is mutual.
Milton, Plate 38 (E138)
"In the Eastern porch of Satans Universe Milton stood & said
Satan! my Spectre! I know my power thee to annihilate
And be a greater in thy place, & be thy Tabernacle
A covering for thee to do thy will, till one greater comes
And smites me as I smote thee & becomes my covering.
Such are the Laws of thy false Heavns! but Laws of Eternity
Are not such: know thou: I come to Self Annihilation
Such are the Laws of Eternity that each shall mutually
Annihilate himself for others good, as I for thee"