Addressing a one-day conference marking the launch of the report, the Labour leader supported considering taxing child benefit for the better-off but was sceptical about the commission's suggestion of a graduate tax.
He said the report showed the degree to which the 'left of centre' was dominating the battle of ideas in politics. 'It is a signal of growing confidence on the left, not just because the Government is failing but because we are addressing the concerns of the British people and their families.'
The harsh reality of welfare dependency was brought home to the London conference by Joan Halsall, a lone parent from Oldham, searching for work but living on income support for two years.
'Don't write us off,' Ms Halsall appealed to the audience of welfare, employment and political professionals. 'Social justice for me would be the chance to support my own family financially as I do emotionally. Social justice would give me and people like me the hope that the future would be better.'
She asked delegates to share a vision of counting their slices of bread on a Saturday night or realising there was no milk for hungry children.
'Many of us can't afford to work and be worse off - not because benefit levels are too high, but partly because wages are criminally low.' Jobs were advertised in her local job centre for pounds 1.70 an hour.
Mike Atkins, of the Sheffield and District Afro-Caribbean Community Association, warned of a repeat of the 1981 'revolution - what you call a riot' if black people were not involved in devising strategies for their own communities: 'There is no social justice unless there is racial justice.'
Mr Blair said the issue was not whether the welfare state, designed 50 years ago, needed reform. It did. 'The dividing line is between Labour that wants to modernise it and the Tories who fundamentally do not believe in it and are undermining it.'
Difficult choices had to be faced on pensions, child benefit, health and education. Second-generation welfare had to give people 'a hand-up and not just a hand-out'. Above all, it had to attack the insecurity of middle-income Britain and the poverty of low-income Britain.
He said Labour remained committed to a basic pension. But across-the-board increases for all, irrespective of circumstances, could be inefficient because income support for the poorest pensioners was reduced pound for pound, and was very expensive. It would cost pounds 9bn to raise the basic pension to pounds 80 a week.
On child benefit, Mr Blair told the conference: 'We have to ask ourselves, as the commission asked themselves, whether everyone, irrespective of income, should receive the same level of financial support for their children.'
The commission suggested that top-rate taxpayers should pay tax on the benefit, raising some pounds 300m, with the gains being used to improve the lives of other children.
Some proposals would be accepted by Labour and some rejected. 'But the commission have issued a challenge to all politicians. It should be clear to anyone with eyes to see that pounds 80bn-worth of social security does not guarantee social justice.' In Britain today it was evidence of economic failure. Mr Blair maintained that social justice could be extended within existing levels of spending. It was a matter of getting the priorities right. A successful economic policy combined with effective modern welfare would mean a reduction in the benefit bill.
David Marquand, a commission member, professor of politics at Sheffield University and a former Labour MP, said the totality of the report would 'obviously mean there would have to be a shift in resources'.
The absence of any detailed arithmetic was picked up by several delegates.
Ben Pimlott, chairman of the Fabian Society, asked if the commission was advocating an increase in public expenditure. But Dr Eithne McLaughlin, a commission member and reader in Social Policy at Queens University Belfast, admitted: 'You cannot cost what we have done in this report.'
In an opening address, Sir Gordon Borrie QC, the commission's chairman, said that 21 months ago they set out to 'rethink the Beveridge model, not repackage it'. Social justice was 'about whether wages can support a thriving family, whether people in need are given a hand-up rather than a hand-out, and about whether our children can expect a better future than ourselves'.
The commission member Emma McLennan, vice-chairman of the Low Pay Unit, said benefit reforms had to help enable people to take up work and 'training must not be for training's sake'.
One delegate from Liverpool said he would be 'going home with a suitcase of tarted- up old phrases'. Another, from Manchester University, said when the commission began taking soundings from the academic community, 'they appeared to be battling to define the role of government - they are still searching for an answer'. She added: 'Sir Gordon's comment that 'the commission would combine the ethics of community with the dynamic potential of a market community' is a classic fudge of political confusion.'
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