The conservative prime minister denied in a television interview on Sunday he was isolated over the plan to loosen France's rigid labour laws for people under the age of 26, and invited unions to talks starting in April on ways to combat job insecurity.
"We had a crisis in the suburbs a few months ago, people forget that," Villepin said, referring to weeks of unrest around France that was blamed in part on high youth unemployment.
"When youth unemployment in the suburbs is 40 to 50%, what do we do? Judging by the comments of some people, you'd think everything is going well ... What do we do, just fold our arms as we have done for years or tackle the problem?"
Villepin was speaking on TF1 television a day after riot police smashed their way into Paris's Sorbonne University to end the first student occupation there since a May 1968 student revolt that weakened his political idol, Charles de Gaulle.
The three-day student sit-in was the climax of a week of protests affecting half of France's 80 universities.
Accused of being out of touch as he prepares a likely bid to succeed his mentor Jacques Chirac in presidential elections next year, Villepin insisted he was a man willing to listen.
Villepin insists he is a man
willing to listen to critics
"The law that has been voted will be enforced. But, as provided for in the law, I want the guarantees which are included in it to be complemented by new guarantees" that will be negotiated with unions and employers, Villepin said.
Unions said they wanted the law scrapped first.
Referring to Villepin, Bernard Thibault, head of France's biggest union, the Communist-backed CGT, said: "His love of himself is getting the better of his political pragmatism."
Villepin's First Employment Contract (CPE) allows bosses to fire young people without reason for up to two years in the hope this will also encourage firms to be bolder in their hiring.
Students say this discriminates against youngsters while unions say firing without explanation is wrong in principle. Student organisations plan two more demonstrations this week.
Villepin said he stood by the two-year term of the CPE contracts but suggested this could be reduced by some employers.
Opposition Socialists are hoping
to capitalise on the unrest
Appointed by Chirac in May 2005 after his conservative government had been dealt a serious blow by defeat in a referendum on Europe, Villepin took charge with a fiery personal style that at first secured him a firm footing in the polls.
But a series of mishaps from suburban unrest late last year to a pick-up in unemployment, a row over privatisation and a health scare in France's Indian Ocean island of Reunion have piled pressure on Villepin and left him battling on all fronts.
Villepin's number two in the conservative government, Nicolas Sarkozy, the interior minister, who is also seen as his main rival for the conservative nomination in 2007 presidential elections, cut short a trip to the French West Indies because of the protests.
Both men are anxious to avoid any mis-steps in response to the rioting, after Sarkozy was widely said to have blundered by referring to last year's suburban protesters as "riff-raff".
"[Villepin's] love of himself is getting the better of his political pragmatism"
head of CGT, France's biggest union
But Villepin awoke to headlines branding him isolated on Sunday as opposition mounted against a measure identified as his own brainchild, intended to create momentum for 2007 elections.
For now at least, Sarkozy in public supports his rival but his supporters have begun to distance themselves from Villepin's proposals, such as the employment contract.
"The CPE is an interesting measure but it can be enriched, clarified, adjusted," top Sarkozy aide Brice Hortefeux said.