Alex Barker, John Reed and Geoff Dyer

Tony Blair is preparing to step back from his role as envoy for the Quartet of Middle East peace negotiators as the US and Europe review policy options ahead of Israel’s nail-biting election this week.

After nearly eight years, the former British prime minister has recognised that a frontline role is no longer tenable, according to several people familiar with the situation. His move comes amid deep unease in parts of Washington and Brussels over his poor relations with senior Palestinian Authority figures and sprawling business interests.

Mr Blair is embarking on delicate negotiations to recast his Middle East role but is determined to remain part of the peace process. He met John Kerry, US secretary of state, on Saturday in Sharm el-Sheikh, Egypt, to discuss a possible job change. He also spoke to Federica Mogherini, the EU’s foreign policy chief, who is pushing for a revamp of the Quartet and for Europe to take a more robust stance on Israel’s conduct.

If Mr Blair does step aside or take an informal position it would end the controversial arrangement that has made him a fixture of Middle East diplomacy while conducting private business with some regional governments that he also deals with through the Quartet, which represents the UN, US, EU and Russia.

No final decisions have yet been taken by the Quartet but a clarification of Mr Blair’s role could come later this week. Mr Blair’s office declined to comment.

Although Mr Kerry is a supporter of Mr Blair’s continued involvement, some other senior figures in Washington told the FT they wanted Mr Blair to step aside. Concerns include his multiple charitable, diplomatic and commercial interests. Ms Mogherini, meanwhile, is looking beyond Mr Blair as she recalibrates Europe’s approach and appoints a new EU Middle East envoy.

Brussels stopped funding Mr Blair’s office in 2012 and he was not invited to the last minister-level meeting of the Quartet, which took place in Munich and was convened by Ms Mogherini. Officials said the talks were primarily political and unrelated to Mr Blair’s economic mandate.

Some senior diplomats said Mr Blair was being eased out of the position. “It is long overdue,” said one diplomat briefed on the discussions. “He has been ineffective in this job. He has no credibility in this part of the world.”

Another person close to the Obama administration said: “Tony Blair is neither an asset nor a liability, but his current role is no longer viable.”

At the behest of the George W Bush administration, Mr Blair was appointed to the Quartet position in 2007, shortly after serving as British prime minister for a decade. His energetic support for the Iraq war had made him a controversial figure among many Palestinians from the outset.

Founded in 2002, the Quartet has largely been sidelined over the past two years from peace process diplomacy while the Obama administration tried to broker talks. Those negotiations fell apart last year.

Last week Mr Blair told friends he was seeking to reconfigure his role and had grown weary of being blamed for the Quartet’s shortcomings that were beyond his narrow remit and responsibilities.

In recent months Mr Blair’s role as Middle East envoy has come under increasing criticism with questions raised about his dual role as super-diplomat and businessman. He does not disclose any clients but they have included countries such as Peru, Colombia, Kuwait, Vietnam and Kazakhstan. His corporate roster has included PetroSaudi, an oil company with links to the ruling Saudi royal family, JPMorgan and Mubadala, an Abu Dhabi wealth fund.

A senior western official familiar with the Quartet denied there had been any “‎effort to push Blair out of his current role”. Any decision would need to be taken by consensus and the Quartet had yet to discuss a remit change at ministerial level.

Mr Kerry and Mr Blair are weighing potential options to give the former prime minister a more political role, which puts to better use his sway in the Gulf, Egypt and Israel. In a sign of his priorities, Mr Blair has also made several trips to Gaza recently, stressing the importance of Palestinian unity.

If a new Israeli government is elected this week led by the centre-left, the Obama administration might try to revive its stalled peace talks. However, if Israeli premier Benjamin Netanyahu returns to power with a rightwing government that appears critical of a two-state solution, there will be growing pressure from the EU and the UN to become more involved.

Palestinians have been scathingly critical of Mr Blair’s modest record as Quartet representative, not least because the role was limited to economic affairs, an issue inextricable from the failed peace process and Israel’s four and a half decade-old occupation of Palestinian lands.

European diplomats in Jerusalem say they have been pushing for the representative role to be expanded and redefined. “I’m not seeing that much added value,” said one senior diplomat.

Mr Blair, who makes periodic visits to the Quartet Representative’s office in a walled compound in Palestinian East Jerusalem, was charged with overseeing a $4bn plan to stimulate growth and investment in the Palestinian territories, announced by the US secretary of state in 2013, when Israel and the Palestinians were close to launching their last, unsuccessful round of peace talks.

The plan, devised with advice from the consultancy McKinsey, was meant to run in parallel with peace talks and would have relied heavily on Israeli goodwill and permits relaxing the tight Israeli restrictions over freedom of movement and planning permissions in the West Bank and Gaza Strip.

Additional reporting Heba Saleh in Cairo