Insisting local government has got a 'problem', he says there is public demand for mayors. They would have a 'clear mission' to regenerate inner cities and 'revitalise' local government.
Labour has deferred referendums on elected regional assemblies in England, if they happen at all, until a second parliamentary term. Mr Blair is said to be worried that English regional assemblies might to little other than duplicate existing government bureaucracy.
He says: 'It really depends on what people want in England. I think it's possible over time that you carry on with the process of decentralisation, but it depends on going at the pace that people want. The bottom line has got to be: does it deliver a more efficient, more accountable government?
'The big cities have tremendous capability, they've got huge problems and they need a real political focus, and it can't all be done from Whitehall.
'Millions of people live in the inner city. They often live with poor schooling, high crime, low quality transport and an environment that doesn't encourage people to stay and raise families.
'To regenerate it you need it focusing on an individual who has a clear initiative and is going out to get either elected or booted out.'
Councils in big cities outside London have been cool on the idea, but Mr Blair leaves little doubt that he expects them to happen.
'There is the demand, certainly from the people,' he says.
Meanwhile, the Financial Times editorial (p29) says there is confusion about where all the plans for devolution, regional assemblies and other local government changes are going to end up.
It concludes that if local authorities were given the financial freedom to become more democratically accountable bodies, it might be possible to build credible regional structures upon them. It all comes back to how far Mr Blair wants to devolve power.