Blair, who talked for 90 minutes with Saudi Arabia's de facto ruler Crown Prince Abdullah, said he wanted to focus on raising Palestinian living standards but gave no details of his plans.
"We discussed the Middle East situation and I explained that we wanted to have an initiative at the G8 next week to help the Palestinian Authority in the wake of the disengagement," Blair told reporters.
"Obviously the support of Saudi Arabia would be important for that," he added.
G8 leaders begin their annual meeting in Scotland on Wednesday, ahead of a planned withdrawal next month of Israeli soldiers and settlers from Gaza, home to 1.3 million Palestinians.
Blair had said on Friday that he detected a fragile "atmosphere of hope", and promised to set aside time at the summit to discuss his plan.
"The most important thing is that we are raising the living standards of people on the Gaza (Strip) and West Bank when the disengagement happens," he said in Riyadh.
Blair, on his first visit to Saudi Arabia since October 2001, met Abdullah after a formal dinner at the prince's palace in Riyadh.
Abdullah launched an Arab peace initiative in 2002 offering Israel normal relations in return for its withdrawal to the borders as they stood on the eve of the Middle East war of 1967, a condition the Jewish state has rejected.
The need for stability and security
in Iraq also came under discussion
"Both of them talked about the Palestinian issues as the primary (element) for any security and stability in the area," Saudi Arabia's ambassador to London, Prince Turki al-Faisal said.
He said they also discussed the need for stability and security in neighbouring Iraq where, more than two years after the US and British troops invaded to topple Saddam Hussein, they are fighting a bloody conflict with anti-US fighters.
Dissidents and trade
Turki said they touched on "cooperation in the fight against terrorism", but declined to say whether Saudi Arabia had sought the extradition of a dissident it accuses of involvement in an alleged Libyan plot to kill Abdullah.
London-based Saad al-Faqih denies any connection with insurgent groups, but his name was added in December - at US and British requests - to a UN list of people suspected of links to Saudi-born Osama bin Laden's al-Qaida network.
Interior Minister Prince Nayef publicly questioned Britain's commitment to fighting insurgents in March as long as it gives "sanctuary" to al-Faqih.
The row could hurt trade relations just as Saudi Arabia, flush with record oil revenues, is unveiling billion-dollar power and water projects and showing interest in potentially lucrative jet fighter purchases.