The former prime minister, who filed three years ago to become EU President, called for a "grand plan" as the only way to avoid a break-up of the 17-member eurozone.
He said: "The only thing that will save the single currency now is, in a sense, a sort of grand plan in which Germany is prepared to commit its economy fully to the single currency.
"That means treating the debts of one as the debts of all, which is very hard for Germany to do. It means the other countries in the eurozone need to reform, need precise, credible programmes of change to reform so that Europe can regain its competitiveness.
"Otherwise, it is quite unfair to ask Germany to pay."
Mr Blair, a leading Europhile, also refused to accept the single currency's troubles meant the UK would never join. "If they sort it all out and Europe moves forward again, then Britain is going to have a very interesting choice to make," he stressed.
He noted that if people looked at the "broad sweep of history", then in the longer term the "European integration project" would go ahead "like it or not". The UK, as a small island nation, had to be part of it to have any influence, he added.
His intervention came as EU leaders prepare for yet another crunch summit this week that could determine the fate of the eurozone. They are expected to set out plans for greater fiscal union, including the formation of a banking union. However, these are expected to take several months to come to fruition, months the eurozone may not have.
Meanwhile, Antonis Samaras, the new Greek Prime Minister, will miss the summit after undergoing eye surgery for a damaged retina.
Greece's new leaders are hoping to use the summit in Brussels to water down the requirements imposed on their country by other EU countries and by the International Monetary Fund, including an extension to the deadline for it to reduce its budget deficit by at least two years to 2016.