He is to head Mr Blair's private think-tank on Europe. Provisionally called the Centre for European Reform, it will be launched shortly with the support of senior figures from large companies as well as trade unions.
Michael Portillo's speech to the Conservative conference in October helped to bring the centre about.
The Defence Secretary lauded the SAS and proclaimed that British troops would never "fight for Brussels".
Emma Nicholson was also influenced by what many regarded as a xenophobic speech.
Lord Gilmore, 61, who served in Moscow and Vienna and was High Commissioner in the Malaysian capital, Kuala Lumpar, was FCO Permanent secretary and Head of the Diplomatic Service from 1991 to 1994.
He is the second senior ex-diplomat to join Mr Blair's Labour team. Jonathan Powell, younger brother of Sir Charles Powell, Lady Thatcher's foreign affairs mentor, was poached from the British Embassy in Washington last year to be chief of staff to the Labour leader.
Mr Blair sees the active support of a former Whitehall mandarin of Sir David's stature as a political coup. Now touring Australia, he said yesterday: "The debate in this country about the future of Britain in Europe is too often sterile and backward looking. I believe the new centre can fill an important gap."
Lord Gilmore said that the centre would involve young people, not "the hoary old usuals". He added: "We're going to engage in serious discussion, not the exchanges of ya-boo which too often take place."
The centre, which is intended to be pan-European, aims to ensure that Conservative disarray over the European Union does not lead to Britain being frozen out of discussion on its future.
It will call on intellectual contributions from the left throughout Europe and there will be room for federalists and anti-federalists alike, from inside and outside the Labour Party.
The first subjects for the centre will include the criteria for the expansion of the European Union into Eastern Europe; the crucial inter- governmental conference next year; and the future of Europe's defence.
Lord Gilmore, who worked for Reuters news agency after he graduated, has taken on a variety of jobs since his retirement last year: he is a director of Prudential Assurance and Vickers, and a senior adviser to BZW, the City stockbrokers, as well as being chairman of the Art and Antique Dealers' Association.
Playing key roles in the centre's establishment are Jonathan Powell and David Miliband, Mr Blair's head of research. Peter Mandelson MP, Labour's principal spin doctor, has also been among those who have helped the new body to birth.Reuse content