Tony Blair yesterday called for a radical rethink of foreign policy in the wake of the Israel-Lebanon crisis.
In a keynote address to the World Affairs Council in Los Angeles Mr Blair said the battle of ideas must be joined in the struggle to make sure the forces of moderate Islam prevail over reactionary and terrorist elements.
He stated that "a complete renaissance of our strategy" is needed to combat "an arc of extremism stretching across the Middle East".
His speech came as the 25 EU ministers agreed to call for an urgent halt to the fighting, effective immediately, and the Israeli army pushed deeper into southern Lebanon.
Mr Blair told his 2,000 strong audience: "I planned the basis of this speech several weeks ago, the crisis in the Lebanon has not changed its thesis.
"It has brought it into sharp relief.
"The purpose of the provocation that began the conflict was clear - it was to create chaos, division and bloodshed to provoke retaliation by Israel that would lead to Arab and Muslim opinion being inflamed not against those who started the aggression but against those who responded to it."
The Prime Minister continued: "It is still possible even now to come out of this crisis with a better long term prospect for the cause of moderation in the Middle East succeeding but it would be absurd not to face up to the immediate damage to that cause which has been done.
"We will continue to do all we can to halt the hostilities but once that has happened we must commit ourselves to a complete renaissance of our strategy to defeat those that threaten us.
"There is an arc of extremism now stretching across the Middle East and clutching with increasing definition countries far outside that region.
"To defeat it will need an alliance of moderation that paints a different future in which Muslim, Jew and Christian, Arab and Western, wealthy and developing nations can make progress in peace and harmony with each other.
"We will not win the battle against this global extremism unless we win it at the level of values as much as force, unless we show we are even handed, fair and just in our application of those values to the world."
Mr Blair went on to concede: "In reality we are at present far away from persuading those we need to persuade that this is true.
"Unless we reappraise our strategy, unless we revitalise the broader global agenda on poverty, climate change, trade and in respect of the Middle East, bend every sinew of our will to make peace between Israel and Palestine we will not win and this is a battle we must win.
"What is happening today out in the Middle East, in Afghanistan and beyond is an elemental struggle about the values that will shape our future.
"It is in part a struggle between what I will call reactionary Islam and moderate mainstream Islam but its implications go far wider.
"We are fighting a war but not just against terrorism but about how the world should govern itself in the early 21st century, about global values."
Mr Blair's official spokesman said the Prime Minister -due to go on vacation later this week - was reviewing his holiday plans day by day to see whether he needed to stay in the UK to deal with the current crisis.
However, most observers believe Mr Blair will take his holiday as planned but keep in constant touch with fellow world leaders.
European Union foreign ministers yesterday called on Israel and Hezbollah to agree to an "immediate cessation of hostilities" followed by international efforts to get agreement on a sustainable ceasefire. Britain, Germany and the Czech Republic had earlier rejected a draft EU statement calling for an immediate ceasefire.
The three nations, at the emergency talks, offered an alternative draft calling for an eventual "cessation of hostilities".
They rejected a tough draft drawn up by Finland which calls "for an immediate ceasefire."
This was altered by the three to an appeal to all parties "do everything possible to protect populations and to refrain from actions in violation of international law."