“It is time to recognise that only by change will Europe recover its strength, its relevance, its idealism, and therefore its support amongst the people,” the British Prime Minister told the European parliament in Brussels.

In his 30-minute speech, he described himself as being “a passionate pro-European”, rebutting critics who claim he’s only interested in Europe as a free trade zone.

“I believe in Europe with a strong and caring social dimension,” he said. “I would never accept a Europe that was simply an economic market.”

With Britain to take on the rotating EU presidency on July 1, he said Europe must meet the challenge of globalization.

Trumpeting Britain’s social and economic model as a success, he called on the EU to gradually reduce the share of its budget spent on farm subsidies.

In a public rebuttal of those who accuse Britain of wanting to replace the European social model with an “Anglo-Saxon” economic free-for-all, he asked: “What type of social model is it that has 20 million unemployed in Europe?”

Mr Blair has been bitterly criticised for the acrimonious collapse of last week’s Brusssels summit, especially his refusal to discuss Britain’s budget rebate unless wider reforms, including agricultural subsidies, were discussed.

On Wednesday French President Jacques Chirac criticised British “intransigence”, telling a French cabinet meeting that Europe was going through a “serious crisis.”

But the British leader urged calm, saying “the debate over Europe should not be conducted by trading insults or in terms of personality. It should be an open and frank exchange of ideas.”

But in a clear swipe at his French and German peers, he also said the EU was facing a crisis of political leadership.

He claimed economic stagnation made it hard to win voter support for the bloc’s troubled constitution in most of its 25 countries, implying European politicians had lost touch with the people.

“The people are blowing the trumpets round the city walls,” he said.

“Are we listening? Have we the political will to go out and meet them so that they regard our leadership as part of the solution not the problem?”

Despite the occasional cat call, his speech received a broadly warm reception, surprising some who had expected more leftist taunts.

“At this time the European Socialists will be at Tony Blair’s side,” said Martin Schulz, head of the European Socialists. “We must lead the necessary debate… Naturally we must reform the CAP.”

German Chancellor Gerhard Schroeder welcomed what he said was Blair’s call for the EU to be a “political union.”

Mr Blair’s speech “clearly said he was for a political union,” he said, before adding “We shall see if it succeeds.”

In another twist in the debate, France’s influential newspaper Le Monde on Thursday called for the partial “renationalisation” of EU subsidies to farmers.

In a departure from long-standing French policy, the paper’s editorial said the only way to find the funds needed for EU research and technology was to cut spending on agriculture.

“France can accept a progressive renationalisation. Because in an enlarged Europe it is not justifiable that (France) receive 21 percent of the Common Agricultural Policy”.