The election of French President Emmanuel Macron had put reform of the EU on the table, meaning Britain and the EU could meet "halfway" to strike a deal that would keep Britain inside the world's largest trading area, Blair said.
"The European leaders, certainly from my discussions, are willing to consider changes to accommodate Britain, including around freedom of movement," the former Labour prime minister said in an article published by his Institute for Global Change.
"The opposition to free movement of people, once you break it down, is much more nuanced. The French and Germans share some of the British worries, notably around immigration, and would compromise on freedom of movement."
Blair's comments are at odds with the EU's negotiating stance, which stresses there can be no "cherry picking" from the benefits of membership of the EU's single market without accepting freedom of movement for EU workers.
Blair lamented that both Prime Minister Theresa May's Conservative Party and the opposition Labour Party had set their minds on leaving the single market, without exploring the alternatives.
Blair was prime minister for 10 years until 2007. He wanted to take Britain into the euro zone and believed Britain should lead the way in the EU rather than withdraw from it.
(Reporting by Andy Bruce; Editing by Dale Hudson)
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