Speaking during a brief news conference following a two-hour meeting with Sharon in West Jerusalem on Wednesday, Blair said he will go ahead with a planned international conference in London.
He hoped such a conference would help the Palestinian Authority (PA) achieve what he termed to be necessary political and economic reforms.
He said the London conference will help the PA become a real negotiating partner for peace.
Blair praised Sharon for sticking to his plan to withdraw from the Gaza Strip, saying it was vital that the plan be incorporated into the US-backed plan for peace in the region, known as the road map.
Blair said all efforts will have to lead to the implementation of the road map.
For his part, Sharon said he welcomed Blair's efforts, including the proposed London conference next year, but said there was no need for Israel to participate in talks there.
PA officials say the focus should
be on ending Israeli occupation
"We have talked about it and I think we agree that there is no need for our participation," he said.
Sharon also indicated that Israel will coordinate the planned withdrawal from Gaza with the PA.
Blair will meet leading Palestinian officials, including PLO leader Mahmud Abbas and Prime Minister Ahmad Quraya, later on Wednesday.
PA officials have voiced some consternation over the limited scope of British efforts, namely that they are confined to reforming the PA structure instead of envisioning serious political action towards ending the Israeli occupation.
PA Foreign Minister Nabil Shaath said on Tuesday all peace efforts, British and otherwise, should focus on ending the Israeli occupation.
"We naturally welcome economic aid to the Palestinian Authority, but the real problem is the Israeli occupation," he said.