Tony Blair has warned that the current round of Middle East peace talks must be pursued with ”greater urgency and greater focus” if Israelis and Palestinian are to achieve their goal of a peace agreement by the end of the year.

Mr Blair, who last year became the international community’s Middle East envoy after stepping down as British prime minister, said: ”We can keep going at the present pace, and at the present pace things are moving forward slowly. However, this pace is not urgent enough to deliver an agreement this year. There needs to be greater urgency, greater focus and greater determination.”

In an interview with the Financial Times and other European newspapers, Mr Blair insisted he was making progress towards his task of improving the Palestinian economy and bolstering the capabilities of the Palestinian Authority. The economy in the West Bank was growing, he said. But he admitted that the situation in Gaza, the other half of a future Palestinian state, was ”terrible”.

Mr Blair said: ”There are signs of economic activity but it is not nearly enough to show Palestinians that there is a viable prospect of statehood in the future.”

He said it was unrealistic to expect Israel to lift entirely the tight restrictions on movement and access in the Palestinian territories, which are widely judged to be the biggest impediment to growth. Instead, he hopes to persuade Israel to ease restrictions with regards to a list of development projects he outlined last year.

Mr Blair blamed the worsening humanitarian situation in the Gaza Strip largely on Hamas, the Islamist group that took control of the territory last June: ”The situation in Gaza would ease immediately if Hamas stopped the rockets from being fired from Gaza into Israel,” he said.

But he also implied criticism of Israel’s policy of isolating the strip and stopping deliveries of supplies to its 1.5m residents: ”We need a better strategy, one that isolates the extremists and helps the people and not [one that] helps the extremists and isolates the people.”

Mr Blair refused to enter the debate over his chances of becoming the president of the European Union council, a post he had been linked to. ”The post doesn’t exist, so there’s no point talking about it,” he said.