The controversial EU constitution, rejected in 2005 after votes in France and the Netherlands, should now be revisited, Peter Mandelson says.
Mr Mandelson: Rules needed
The ex-Labour Cabinet minister, who is now EU trade commissioner, said there was a need to create new institutions to accommodate an expanding Europe.
Mr Mandelson said the rejected version was a "very good basis" for EU reform.
But he acknowledged that "in the eyes of many" it did not provide a solution to enlargement.
The French and Dutch "No" votes last year effectively killed off the constitution treaty.
That meant Tony Blair did not have to go ahead with a UK referendum on the constitution plans.
No rush to embrace
Mr Mandelson told BBC News: "As we enlarge Europe - and I think we should do for the political benefits... then we have to create rules, we have to create institutions that accommodate a growing population and a growing number of member states.
"I think the present constitutional treaty in the eyes of many does not provide a solution. It was a very good basis and in many respects it has ideas proposed that we should not lose sight of."
"But I don't think people are ready to adopt, let alone rush to embrace, at this stage."
In June 2005 EU leaders agreed to have a "period of reflection" before deciding what to do next in the wake of the constitution's rejection by voters in France and the Netherlands.
East Midlands Tory Euro MP Chris Heaton-Harris criticised Mr Mandelson's comments, saying the constitution was "categorically rejected" by the French and Dutch and "several other countries including Britain would have rejected it too".
Need for change?
"What part of 'no' does Peter Mandelson not understand? Mr Mandelson's calls for more rules, regulations and expensive institutions just goes to show how much more out of touch he has become since moving to Brussels," he said.
Tory Europe spokesman Graham Brady accused Mr Mandelson of "forgetting how democracy works".
He added: "The kind of Europe he's arguing for - more powers for Brussels and fewer for the nation states - is exactly the kind of Europe that French and Dutch voters rejected only last year. That verdict should be respected."
Lib Dem foreign affairs spokesman Michael Moore: "Peter Mandelson is right that things in Europe need to change. Without some basic reforms, the European Union will be unable to achieve its full potential when tackling economic, security and environmental concerns. The constitution is dead but the process of reform must not be."
A spokesman for the UK Independence Party (UKIP), which favours Britain's withdrawal from the EU, said parts of the rejected constitution had been introduced "piecemeal" into European rules despite the French and Dutch 'no' votes.
"It doesn't matter what you call it, a constitution is a constitution."
The constitution cannot come into effect unless it is ratified by all 25 EU members. This means that if it is ever to be resurrected, France and the Netherlands will have to vote again. This is not likely until after the elections which are due in both countries in 2007.
Meanwhile Austria, which holds the revolving EU presidency for the six months until July, has been charged with stimulating a discussion about what to do with the consitution plans.
Mr Mandelson is due to address an audience in Romania on Thursday to launch the expansion of a central European free trade agreement.
"It's holding the prospect of joining the EU that will bring political stability but also bring immense economic benefits," he said.