In a speech to the Social Market Foundation, a centre-right think-tank, he called for a new co-operative approach, in which schools worked together to allow pupils to pursue studies that would not otherwise be available. He also said schools should be able to develop specialisms and share resources.
Thirty years after the abolition of the 11-plus, he said many comprehensives had recreated the worst features of secondary modern schools and failed to live up to the ideal of equal access to a first-class education for all.
"Instead of mirroring the undoubted quality of grammar-school education by lifting standards and levels upward we have preferred too often to call secondary moderns comprehensives and allowed them to carry on in exactly the same way as they had done previously," he said in a lecture on diversity within comprehensive education at the Institute of Civil Engineers, London.
Mr Blunkett also slammed the cynical "old Left and new Right" for assuming nothing could or should be done about the yawning gap in British education.
And he rounded on ideologues who eulogised universal mixed-ability teaching, calling instead for "diversity" in education which would allow pupils of different aptitudes to develop at a different pace.
Reiterating Labour policy initiatives on standards, he said this could be achieved by means of setting, accelerated learning and extra support for those falling behind.
He praised a comprehensive in Oswestry, Shropshire, where a successful system of setting was in place and two pupils had gained an A in GCSE maths at 14.
He also cited as an example of good practice Birmingham's University of the First Age project, which offered accelerated learning opportunities through intensive, interest-led courses out of school hours and during the holidays.
And he commended schools in the city of Nottingham which had developed in conjunction with the county council a system of target grouping or setting that had raised standards.
Mr Blunkett said instead of being divided against one another, "families" of schools, including those in the independent sector, should work together, sharing expertise and allowing pupils to undertake studies that otherwise would not be available. The development of new technology and inter-active communication would facilitate this process, enabling pupils to access particular parts of the curriculum.
In some areas schools might timetable for young people to take languages in a neighbouring institution or use the facilities after school. Schools should be able to develop specialisms and share their resources and expertise rather than use their status as an excuse for selection.
"The idea of saying you should only get Latin in a private school is daft, " he commented after the lecture.
He pointed out that "comprehensive education was born not of political conflict but of cross-party consensus". A groundswell of public opinion had brought the comprehensive system forward in the Fifties and Sixties when the 11-plus became extremely unpopular. Another influence was former Prime Minister Margaret Thatcher's time as Education Secretary, during which she did more to change the admissions policies of grammar schools than any other Education Secretary.
"The comprehensive system grew from the belief which then extended across the political divide that we must offer the opportunity of a decent education to all children, not just the select few," Mr Blunkett said. But during the 30 years of comprehensives - and 50 years of universal state secondary education - a persistent pattern has developed of excellence at the top and chronic under-performance at the bottom. Other countries experienced the same gulf, but Britain was unique in regarding it as inevitable.
"We assume something is quite different about other countries when we know in our hearts that our children are not thicker and our teachers are not less competent," he said. "If the comprehensive system is to work it must work in a wholly new way ... I believe it can be done."