Middle East envoy Tony Blair called here Wednesday for a new strategy to bring the Gaza Strip back into the peace process and warned a proposed two-state solution risked slipping away.

Blair offered few details for the future of Gaza but entertained the idea that the Islamist Hamas could either be ousted from power in elections there or could even join the political process if it drops its anti-Israeli stand.

"We need a new strategy for Gaza," Blair told foreign policy specialists at a gathering in Washington hosted by the Council on Foreign Relations (CFR) think tank.

"You will not get a peace deal while Gaza remains as it is," said the former British prime minister who has served for 15 months as Middle East envoy for the quartet of the United States, European Union, United Nations and Russia.

Israel has imposed a tight economic blockade on the Gaza Strip since Hamas seized the territory from the western-backed Palestinian Authority in June 2007 and engaged in frequent armed clashes with the Jewish state.

A shaky ceasefire in and around Gaza has been in place since June this year. Meanwhile, the rift between the Palestinian Authority, based in the West Bank, has deepened despite reconciliation talks sponsored by Egypt.

Blair said the situation in Gaza was untenable, citing in particular the smuggling of weapons and goods which he warned undermines Gaza's legitimate economy. "I think time is pretty urgent," he said.

Asked by the council's president Richard Haas if he envisioned Hamas being ousted in elections or that it might change "its stripes" to join the political process, Blair said "either one of those things is a possible way through."

The envoy for the Middle East quartet noted that elections must be held in the Palestinian territories no later than 2010.

"We're going to try and make sure that people with a moderate and modern view of the future of Palestine win, or we'd better get the right measures in place to do that," Blair added.

Hamas caused a major stir internationally when it won legislative elections in 2006.

Another possibility, Blair said, is that the international community does a better job of convincing Gazans that they can have the blockade lifted "provided that the politics within Gaza conform to a peaceful resolution."

The quartet has endorsed a roadmap that calls for a Palestinian state living in peace alongside a secure Israel. It has refused to deal with Hamas, which it sees as a terrorist group bent on Israel's destruction.

"I think there is a risk," Blair conceded when Haas asked him if the moment was fast approaching where a two-state solution may no longer be possible.