The prime minister warned clerics in the country that "the rules of the game are changing".
A combative Blair also responded furiously to an al-Qaida statement on the attacks, the first of which killed 56 people, saying they were a response to the conflicts in Iraq and Afghanistan. Blair labelled the argument as an "obscenity".
Speaking at his final Downing Street press conference before an imminent summer break, Blair unveiled around a dozen proposals to crack down on radical Muslim clerics who advocate terrorism or foment hatred.
"Let no one be in any doubt that the rules of the game are changing," a stern Blair warned.
"Coming to Britain is not a right and even when people have come here, staying here carries with it a duty. That duty is to share and support the values that sustain the British way of life," he said.
Among potentially controversial moves is a possible review of the 1998 Human Rights Act, which incorporates the European Convention on Human Rights into British law, to see if it might have to be circumvented to speed up the deportation of foreign nationals linked to terror.
A section of the convention preventing deportation if the detained person fears torture on their return home might be challenged, Blair said.
Additionally, Britain's obligations under international asylum rules would be altered, the prime minister said.
"Coming to Britain is not a right and even when people have come here, staying here carries with it a duty. That duty is to share and support the values that sustain the British way of life"
British Prime Minister
"Anyone who has participated in terrorism or has anything to do with it, anywhere, will automatically be refused asylum in our country," he said.
After the 7 July attacks on London underground trains and a bus, and a bungled attempted repeat a fortnight later when the bombs failed, attitudes in Britain had hardened, Blair said.
Overall, the response of the British people had been "unified and dignified and remarkable", Blair said.
"However, I am acutely aware that alongside these feelings is also a determination that this very tolerance and good nature should not be abused by a small but fanatical minority, and an anger that it has been," he added.
Blair said he had been asked many times in the past four weeks to deal firmly with those who incite terrorism, such as hard-line clerics.
And although the four 7 July attackers were British Muslims, three of Pakistani origin, the new measures were in no way an attack on the Muslim community.
Makki: The link between London
and Iraq can not be dropped
"The Muslim community, I should emphasise, has been and is our partner in this endeavour," Blair said.
Some of the new rules require only an administrative change to existing laws meaning they can be introduced immediately, Blair said, while others need parliamentary approval in the autumn.
Other changes would involve increasing court capacity to speed up deportations, banning groups such as al-Muhajiroun - whose members say it has disbanded - and setting a maximum time limit on extradition cases.
Additionally, powers would be extended allowing the government to strip citizenship from people with British or dual nationality who "act in a way that is contrary to the interest of this country", Blair said.
For British nationals, the government would extend the use of so-called "control orders", which currently allow measures such as limited house arrest for foreign nationals suspected of terrorism.
Blair's personal popularity in Britain has been boosted by his response to the twin attacks, but he remains dogged by the Iraq war, notably whether his decision to back the US-led conflict made London a prime target.
On Thursday, al-Qaida leader Osama bin Laden's right-hand man Ayman al-Zawahri released a filmed statement warning of more attacks unless Britain withdrew from Iraq.
Blair responded angrily to a question about this, noting that the groups putting such arguments forward were also killing innocent people in Iraq and Afghanistan.
"And that is why, when they try to use Iraq or use Afghanistan or use the Palestinian cause as a means of saying, you know, we have justification for what we do, it is a complete obscenity," he said.
Aljazeera.net spoke to the Iraqi political analyst and former professor of journalism at Baghdad University, Dr Liqa Makki, who said the link between the London bombings and Iraq could not be dropped whether British politicians accepted it or not.
"We had yesterday a man from al-Qaida who spoke on behalf of his organisation, and he clearly claimed the responsibility for London attacks and said they are linked to Iraq. How can Blair or anyone else deny that?
"If the perpetrator says I have done this because of Iraq, why should British politicians not consider that?
"If the perpetrator saying I have done this because of Iraq, why should British politicians do not consider that?"
Liqa Makki, Iraqi political analyst
"I personally do not think al-Zawahri or al-Qaida are afraid of giving the real motivation for the London bombings. I think we have to believe them when they say the issue is linked to Iraq."
Moreover, Makki cited the fact that no attacks had taken place in Europe before the Iraq war.
"The fact that the attacks in Europe have taken place after Iraq is a clear indication that the war has everything to do with the bombings.
"Why were there no bombing in France? Why was Spain hit before it pulled its troops from Iraq? And why has it not been hit after its withdrawal?" he said.
Although the four 7 July bombers are dead and the main suspects from two weeks later are in custody, the police have warned that London could face more attacks.
Thousands of police, some armed, flooded the city's streets and transport system on Thursday, mindful that it was two weeks after the second attack, which in turn came a fortnight after the first.
Blair is expected to leave on holiday in the next few days, although his office, following its standard practice, has refused to say where he is going or when.