The government is keen to get an agreement on a partly elected and partly appointed House of Lords, the minister in charge of the negotiations has said.
Jack Straw, who was appointed leader of the House of Commons in the reshuffle earlier this month, said that despite his previous personal opposition to a fully appointed upper House, the status quo was "unsustainable".
In an interview with The Times, he also admitted he had been surprised to be moved from the Foreign Office, in what was widely seen as a demotion.
Mr Straw had expected to remain foreign secretary for another year, and said he had "mixed emotions" about the change - but he rejected suggestions it was at the request of the US, or because he was getting too close to Gordon Brown
The prime minister had made a number of "enforced changes" in the reshuffle, in which 14 senior positions changed hands, Mr Straw explained, saying this and the "greater urgency" following the loans for peerages row made his move necessary.
In the wake of the row, opposition parties called for changes to the way political parties are funded, to avoid concern about the influence of wealthy backers. The issue of who decides who sits in the Lords, if anyone, has also shot up the political agenda.
Mr Blair has always been in favour of a fully appointed House, and Mr Straw supported him, but today the Commons leader said his job was now to achieve a "clear consensus in favour of a mixed elected and appointed chamber".
He added: "Some people think that as parliament becomes stronger, the executive must become weaker. But I have never thought that. It is not a zero-sum game. I have always felt that accountability strengthens your role as a minister and keeps you on your toes."
On the issue of party funding, Mr Straw said he would try to "broker a deal" on how to proceed. This involves looking at the issue of state funding, caps on individual donations and caps on overall spending, which currently stands at £18 million.
"All three parties want this settled before the next election. I want to get to a situation where it is respectable, celebrated, for people to give money to political parties in the same way as it is to give money to charities," he told the newspaper.