He is expected to formally announce to the Commons within weeks that MPs can no longer be sure that the security services and others will not intercept their communications.
Until now, successive administrations have pledged that there should be no tapping "whatsoever" of MPs' phones, and that they would be told if it was necessary to breach the ban.
But that convention - known as the Wilson Doctrine, after Harold Wilson, the prime minister who introduced it - is to be abandoned in an expansion of MI5 powers following the London bombings.
MPs should be treated in the same way as other citizens and will be given the same safeguards against wrongful tapping, the Prime Minister will say.
The decision provoked a furious row in the Cabinet just before Christmas, when the Secretary of State for Defence, John Reid, voiced his opposition.
His outburst surprised other ministers, since he is seen as one of Mr Blair's closest allies and not known for his support for civil liberties.
"Reid demanded to know why on earth we were going down this route," said one government colleague. "It was all the more surprising since you would have thought the MoD is one of the departments most in favour of increased surveillance powers."
A Downing Street spokesman last night said: "The recommendation has been received and will be considered in due course." Mr Blair was last night put on notice that any attempt to tap MPs' phones would be bitterly opposed in the Commons. Andrew Mackinlay, Labour MP for Thurrock, said it was a "hallmark of a civilised country" that its state did not spy on elected representatives.
"This goes to the heart of what is to have a free Parliament not some privilege enjoyed by MPs. Constituents, pressure groups and other organisations need to know for sure that they are talking to their elected representatives in complete confidence."
He is to press for the Commons' Committee on Standards and Privileges to urgently investigate the Downing Street plans to ditch the convention.
Professor Peter Hennessy, the Whitehall and constitutional expert, also called on MPs to question Mr Blair's intentions. "It seems pretty odd to me that they should be doing this," he said.
There has been a marked expansion of surveillance in Britain since 1997. New technology and new laws mean that Britons are among the most spied-on citizens on earth.
Sweeping new powers to snoop on emails, texts and other communications were included in the Regulation of Investigatory Powers Act 2000, while satellite technology offers multiple new surveillance opportunities for the secret state.
Mr Blair has confirmed at least three timesthat his government observed the Wilson Doctrine, most recently in 2003 when it became clear that MI5 had been bugging Sinn Fein's Gerry Adams, who has not taken his seat and so is not formally an MP.
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