Tony Blair has urged America and the European Union to work together on solutions to key global problems.

The prime minister was speaking in the Hungarian capital on Thursday, where he was attending a progressive governance conference organised by the Policy Network think tank.

Addressing the event, Blair said action was needed on a range of major issues including the need to tackle global terrorism.

But he urged cooperation on a wider range of subjects, including global poverty, sustainable development and the Middle East peace process.

"It should be possible for Europe and America to work together on that," Blair said.

Welfare reform

The prime minister also used the gathering of centre left leaders in Budapest to touch on domestic issues.

Blair put tackling those "languishing on benefits" at the top of his agenda.

"In the UK today we have a big debate about how we can provide pensions for people for the future," he said.

"And we will probably have to spend more as a government supporting pensioners in the future.

"But that will mean we have to spend less, particularly on areas where there are people who could work but who presently languish on benefits."

International talks

It was expected that leaders from up to 13 other countries would also attend the conference.

Among those tipped to attend the event were prime minister Helen Clark from New Zealand, Polish president Aleksander Kwasniewski and Göran Persson, prime minister of Sweden.

And although Iraq was not expected to be on the agenda, Spanish leader Jose Luis Rodriguez Zapatero was also set to attend.

Zapatero has been an outspoken critic of the Iraq war, and withdrew his country's troops from the region as soon as he took power.

The two day event was being hosted by Hungarian prime minister Ferenc Gyurcsány.

It was billed as "a unique opportunity for centre left leaders to think jointly in an informal and comfortable setting that vastly differs from the formalised structure and atmosphere of international summit meetings".

"The goal will be to exchange ideas, experiences, and best practices that will help in the development of progressive solutions towards the problems citizens all over the world experience today," explained the conference's website.