A day before he hosts European leaders for a summit on how to meet the challenges of globalisation, the British prime minister told the European Parliament he would do his "level best" to end by December a row with France over the budget.
The row erupted in June when Paris objected to London's calls to slash EU farm spending - worth over 40 billion euros ($48.3 billion) a year with France claiming the biggest slice - in the 2007-2013 budget. Paris also attacked a rebate from Brussels coffers won by former Prime Minister Margaret Thatcher.
"We're not saying we can change the whole system overnight. What we are saying is we should in the future have a different perspective for reform," Blair told parliament, adding he wanted a "more rational way" of spending the EU budget.
"We want our economy to meet the future challenges. At some point we have got to make sure that the budget is aligned with the economic priority of our citizens and of our business and of our workforce," he said.
Blair and other EU leaders are due to meet on Thursday at Hampton Court, near London, to discuss Europe's social models, including issues such as how much protection and welfare the region's workers should have.
Blair wants to keep the budget row off the agenda, although other EU officials have said leaders will inevitably discuss it.
Addressing criticism that Britain has done little in its period as EU president, Blair proposed reforms to get the bloc "back on the right track" after the budget row and the rejection by French and Dutch voters of a planned European constitution.
"We came to the point a few months ago, where as a result of the 'No' vote in the referendums, there was a sense that Europe was in paralysis," the British prime minister said.
Governments had to show "in the next few weeks" that Europe was capable of addressing challenges such as globalisation and terrorism as well as global warming and immigration, he said.
"If we are able to do that, at least we will have made a start in putting Europe back together again, on the right track and moving forward," Blair said.
French President Jacques Chirac, the most outspoken critic of the "Anglo-Saxon" approach to the economy, side-stepped the most sensitive areas of the debate - such as job protection - in articles he wrote for European newspapers on Wednesday.
But he vowed to resist attempts to overhaul Europe - where economic growth has slowed to just over 1 percent and one in five workers are unemployed - in the name of competitiveness.
"The society Europe strives for is centred on human dignity," Chirac wrote in the Financial Times. "Were we to give up this ideal we would betray our heritage. France will therefore never let Europe become a mere free-trade area."
Paris is opposed to attempts by the European Commission to offer more farm concessions in talks to unblock a World Trade Organisation round which is now in danger of collapse.