This blessing is said as hands are ceremonially washed. It is customary to use a large glass or tin cup and pour a small amount on each hand three times using all the water. Then this blessing is recited. In some congregations, a bowl of water is passed around the table and one blessing is said for everyone. This is not a biblical requirement but one instituted by the rabbis possibly to scare away evil spirits.
The blessing (bracha) "Netilat yadayim" in the morning, some suggest in commentaries on the Gemara, has an origin in superstition. "Mazikin" - demon spirits - dance on the body while it sleeps and when one stirs in the morning, they run to the fingertips, pausing there until certain whether one is or is not going to awaken. As they pause, we wash them away, spiritually preparing the body for the morning prayers.(1)
This is the blessing said after the hands are washed.
"Blessed are You, G-d, King of the Universe Who sanctified us with His commandments and commanded us regarding the Washing of the Hands"
("Baruch Atah Ado-noy Elo-heinu Melech haolam, asher kidishanu bemitzvosov vitzivanu al netilas yadayim.")
There is no talking in between the washing of the hands and the blessing of the bread.
When Jesus did not follow these customs, He was questioned by the Pharisees. Jesus response in Matthew 15:18 -20 was:
But the things that come out of the mouth
come from the heart, and these make a man 'unclean.' For out of the heart come evil thoughts,
murder, adultery, sexual immorality, theft, false testimony, slander.
These are what make a man 'unclean'; but eating with unwashed hands does not make him 'unclean.'"
1). Rabbi Barry Dov Lerner
Ask Rabbi Lerner @ http://judaism.about.com/library/3_askrabbi_c/bl_wash_hands.htm
