The measures, which must be endorsed by a summit in Spain next week, include a broad agreement on the need for increased surveillance of sea borders and economic incentives for third countries that co-operate to stem the flow of illegal immigrants.
The meeting in Luxembourg also brought agreement in principle on a multi-national border guard to plug holes in the EU's external borders.
A suggestion by Mr Blunkett and Spain for EU aid to be withdrawn from developing countries that did not try to curb immigration was endorsed by German interior minister Otto Schily but rejected by a number of countries.
"Strong borders must be a priority for all EU member states," said Mr Blunkett.
"We need solutions that tackle the problem of illegal immigration at all levels."
Deportations
Earlier, Mr Blunkett set out wide-ranging proposals to cut the number of people entering Europe illegally.
He made a call for better security at the EU's borders with funding to help foot the bill.
Mr Blunkett says progress on the issue has so far been "too slow".
He called for an action plan to be agreed by the end of the year to show the public the issue is a priority.
It is also reported that the UK was pressing for deportations to Afghanistan to begin again.
The country is currently considered too dangerous to return failed asylum seekers to.
'Social cohesion'
The Luxembourg meeting comes after the House of Commons backed Mr Blunkett's reforms to immigration and asylum laws.
Mr Blunkett told MPs he was looking for a way forward at an EU level.
He said he would be emphasising the need to build "social cohesion within our communities".
Mr Blunkett also wanted an "understanding for the stance we take and a deep and lasting commitment against the racists who would always exploit differences and would always bring us to our knees if they had the chance".
Other key measures Mr Blunkett proposed include:
Mr Blunkett's strong line on asylum and immigration has provoked anger from some in his own party, including international development secretary Clare Short.
But that did not prevent the government's Nationality, Immigration and Asylum Bill from clearing the Commons on Wednesday evening by 362 votes to 74.
Thirteen Labour MPs voted against the government.
The proposals will now be picked over by the House of Lords, where Tories, Liberal Democrats and some Labour MPs have said they will try to make changes.
Strict timetable
On Tuesday, Mr Blunkett dodged a potential clash with more than 30 Labour MPs, led by Neil Gerrard, against plans to segregate asylum-seeking children from mainstream schools.
A strict timetable meant the rebels moves to change the bill could not be debated or voted on, despite protests from Tories and Liberal Democrats.
Mr Blunkett did offer a concession that allows asylum-seeking children to be educated in normal schools after six months at an accommodation centre.
The European Commission believes there may be as many as 500,000 illegal immigrants in the EU.
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