TONY Blair today warned that the European Union will be heading for a break-up if it is unable to resolve the crisis over the eurozone.
The former prime minister said that if the need for greater integration in the single currency bloc resulted in a two or three-speed Europe, it could spell the end of the EU as currently constituted.
Speaking in Berlin, he said that Britain needed to avoid a complete divergence in political structures for those inside the eurozone and those outside if it was not to find itself sidelined in Europe.
Mr Blair also reiterated his call for a directly elected EU president to bridge the growing "democratic deficit" between the people of Europe and the politicians in Brussels.
In his address to the Nicolas Berggruen Institute on Governance, he said that the EU could not resolve the eurozone crisis through the sort of "incremental steps" that have so far been agreed.
Instead, he said a "grand bargain" was needed to convince both the public and the financial markets that the fundamental issues had finally been resolved.
While he acknowledged there would be some "differentiation of speed" within the EU as the eurozone states sought to match their political structures with the need for integrated economic decision-making, he said it was important that it did not go too far.
"I can almost feel the relief in some Euro-federalist quarters and amongst most Euro-sceptics at the prospect of a two or three-speed Europe," he said.
"But I would give a stark warning: if eurozone structures end up with a Europe that is fundamentally divided politically as well as economically; rather than a Europe with one political settlement that accommodates different levels of integration within it, the EU as we know it will be on a path to break up."
Mr Blair warned that it was not in Britain's interest to play "short-term politics" with the issue and he urged the Government to take a positive role in working towards a new settlement.
"Personally I would like to see the UK take a constructive role in shaping this new union, recognising the imperative of closer political union for the eurozone countries and trying to keep the necessary divergence in economic decision-making between ins and outs from spilling over into a complete divergence in political structures," he said.
"It is a very tricky task. But it is an essential one if the UK is not to be sidelined and Europe to be without the active participation of such a large and significant member of the existing union."
Mr Blair argued that a directly elected EU president could help bring Brussels closer to people of Europe who still felt a far closer affinity with their national democracies.
"The danger is that the more we talk of 'bringing Europe closer to the people', the more 'the people' feel alienated from it," he said.
"A Europe-wide election for the presidency of the Commission or Council is the most direct way to involve the public. An election for a big post held by one person - this people can understand," he said.
"The problem with the European Parliament is that though clearly democratically elected, my experience is people don't feel close to their MEPs."
Ukip leader Nigel Farage said Mr Blair's speech represented a blatant pitch for the European presidency.
"This is the man who would sell his country for the bauble of EU office. This a man who cannot be trusted with our or any other country's future," he said.
"He hopes that the EU can in some way have one speed while travelling at two. It just isn't possible. His hopes will be dashed, as I hope will his ambitions."