His proposals include taxing child benefit received by top-rate taxpayers to create a personalised supplementary educational allowance for disadvantaged young people.
Blunkett also wants to see an overhaul of careers information, advice and guidance services. He argues this should be based on early intervention and taken forward through a school graduation ceremony and personal plan for the future.
The former minister's views are set out in The Inclusive Society? Social Mobility in 21st Century Britain, a pamphlet published by New Labour think tank Progress.
In it he also suggests expanding whole family learning and family intervention programmes to build on a "culture of work" rather than depending on benefits.
He said: "Six months into Gordon Brown's government, this pamphlet contains ideas that have come from conversations I've had across the country. It builds on major policy publications over recent months and years, and is a continuation of radical and progressive proposals in support of the future success of the Brown premiership."
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