But the Prime Minister provoked fresh criticism from Labour MPs after dashing their hopes that he was ready to climb down over controversial plans to allow the police to hold suspected terrorists without charge for up to 90 days. He was branded "out of touch" by some backbench critics.
Mr Blair vowed that he would not let his difficulties derail his plans to push through radical reforms before he stands down. He told the weekly meeting of the Cabinet: "Times are tough but they are tough because the Government is trying to do the right thing."
The Prime Minister and Charles Clarke, the Home Secretary, told the meeting the case for the 90-day limit was still "compelling". Mr Blair's official spokesman insisted the move was not a "negotiating ploy" or a Government-inspired proposal but a request from the police after the London bombings in July.
The hard line from Downing Street appeared at odds with the conciliatory tone struck by Mr Clarke in the Commons on Wednesday, when he offered all-party talks on the plan to block a rebel amendment suggesting a 28-day limit. The Government survived another revolt on the Terrorism Bill by just one vote.
The Home Secretary urged MPs to consult their local police before making up their mind on the issue. "I thought it was important that MPs talked to their constituents over the weekend - go into their communities, go and talk to the police in their localities, and form a view," he said.
During a visit to the North-west, Mr Blair tried to turn the tables on Tory, Liberal Democrat and Labour opponents of the Terrorism Bill by challenging them to justify denying the police the powers they want. "This is not an imagined threat," he said. "If we can't get this through Parliament we will have to settle for something less. Nobody should be in any doubt about what I think. A compromise isn't in the interests of this country."
His stance infuriated his critics. Frank Dobson, a former health secretary, said it would be difficult to manage the Parliamentary Labour Party (PLP) if MPs could not believe a word ministers said.
"[Mr Blair] has lost touch with the PLP. He is determined to drive through reforms which have no support in the PLP. His authority is rapidly diminishing because threats no longer have a hold over anyone," he said.
Mr Dobson likened the Prime Minister to an "out-of-touch" Margaret Thatcher before she was ousted from Downing Street by her own party, and urged the Chancellor, Gordon Brown, to tell Mr Blair he should stand down.
Geoffrey Robinson, an ally of Mr Brown and a former Treasury minister, warned that Mr Blair would not get all the reforms he wanted through the Commons. "The backbenchers, for the first time in a serious way, have tasted blood, and they see that with the much-reduced majority they can have a bigger say in the shaping of legislation than was the case in the past," he said.
"I am sure Blair will get his programme through. It is going to be much more difficult for him and it won't be as fully radical as he would like it to be. That is the likely outcome of it."
Mr Blair, keen to issue a business-as-usual message, travelled to Manchester to outline his plans to combat antisocial behaviour with Hazel Blears, the Home Office minister. She is tipped for promotion to the Cabinet next week to fill the empty chair caused by Mr Blunkett's departure.
Michael Howard, the Tory leader, said the Prime Minister's authority was "diminishing to vanishing point". He added: "This is not a man who can now command the confidence of his own party, and the consequences for the country are very serious."
The Government risked another Labour rebellion by turning down demands for a free vote on whether there should be a total ban on smoking in pubs. Geoff Hoon, the Commons leader, said the manifesto outlined the Government's plan to exempt pubs that do not serve food.
Pitfalls ahead for PM
Many Labour MPs have doubts about last week's White Paper. Opponents fear proposals to widen "choice" could result in a two-tier system. Mr Blair could have real trouble securing the passage of the legislation needed to implement the changes.
Mr Blair wants to increase the National Health Service's use of the private sector but the proposals could split the Cabinet and the Labour Party. Gordon Brown is not convinced that creating extra capacity would provide good value for money. The Labour rebellion will be loud and damaging.
Mr Blair wants the biggest shake-up since the present system took effect after the Second World War. Most controversial will be his attempt to curb incapacity benefit for the sick and disabled. John Hutton, the new Work and Pensions Secretary, will be under pressure to deliver reforms his three predecessors baulked at.
A commission chaired by Lord Turner, the former CBI boss, will report on 30 November. The Government faces tough choices over whether to raise the state pension age, increase the basic state pension and make private pension contributions compulsory.
Mr Blair faces the prospect of Commons defeats over his plans to allow the police to detain terrorist suspects without charge for up to 90 days. He is convinced the public will back the police's request for extra powers but defeats would fuel claims he is losing his authority.
To prevent Britain's six months in the European Union's presidency being seen as a flop, Mr Blair wants a deal on the EU budget next month. To curb spending on the Common Agricultural Policy, he will have to surrender Britain's £3bn-a-year rebate, which would be unpopular.