In London Tuesday, Mr. Blair called the rebate an 'anomaly' that must go. But he insisted that budget negotiations include a look at overall EU financing - including farm subsidies.
He said it would be difficult but entirely possible for the bloc to strike a deal on the budget when Britain takes over the EU presidency July 1.
Mr. Blair's comments follow last week's failure by EU leaders to agree on a six-year budget plan.
In Paris, French Prime Minister Dominique de Villepin called the British rebate a relic of the past. But he again stressed French objections to any change in the bloc's Common Agricultural Policy, which he called a major asset for France and for Europe.
Some information for this report provided by AP, AFP, Reuters.