The former prime minister, who has frequently been forced to deny reports that he is sceptical about Miliband's leadership, gave £1,000 to each of Labour's 106 candidates fighting target seats for the party in May's general election.
The £106,000 donation will be his largest ever, after giving the party £7,500 back in 2008. The gift may not be too much of an investment for the former premier, who is reported to be worth £100 million following years of lucrative consultancies with big firms and foreign regimes and property deals. However, he recently insisted such claims were "greatly exaggerated" and that his fortune was closer to £20 million.
In a letter to candidates, Blair said: "I know how hard it can be to raise money to fund a local campaign, but for you, in one of our 106 battleground seats, it is even more vital. This is where the election will be won for Labour and that is why I am making a donation to all 106 campaigns."
"As one of our key seat candidates, you know better than most the scale of the challenge we face, but I have every confidence that with your drive, determination and organisational skills, you will deliver a successful local campaign that will also see our party returned to government."
The modest donation by Blair, who recently promised to do "whatever" Labour wants, is an attempt to mend bridges with the Labour leadership after as recently as last December he appeared to criticise the direction the party is going.
He told the Economist that the election could be one in which "a traditional left-wing party competes with a traditional right-wing party, with the traditional result".
Asked if he meant a Tory win, the former Labour leader said, in remarks which he later claimed had been "misinterpreted" that "Yes, that is what happens."
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A Labour spokesman welcomed Blair's donation, adding: "We’re delighted that Tony Blair has given so generously to the local campaigns in the battleground seats our party is targeting at this general election.
"Our campaign is not based on big posters, talking over the heads of voters, or the sound and fury of Westminster politics. It is based on millions of conversations with people on their doorsteps and in their communities."
Blair's former spin doctor Alistair Campbell expressed excitement about his former boss' donation, writing on Twitter that it was a "great boost to Labour campaign".
Campbell has also tried to help Miliband by savaging David Cameron's "morally cowardly and democratically wrong" position towards the potential TV debates.
Blair and Alistair Campbell have come out to help Ed Miliband
Labour's former director of communications wrote on his blog: "How well I remember David Cameron proclaiming how marvellous the TV leaders' debates were and, more importantly, how vital they were to the democratic process in the modern media age.
"And how pathetic it is, five years on, to watch his wriggling and weaselling to avoid them. If Ed Miliband is as hopeless as Cameron and his press poodles say he is, why is the Tory leader so scared of going head-to-head over an extended period live on TV?"
This comes after the prime minister agreed to take part in just one televised debate ahead of the May 7 election - an event that will feature all seven party leaders. In a Downing Street ultimatum delivered to broadcasters on Wednesday, the prime minister said this was his “final offer,” while blaming the "chaos" of the negotiations between the political parties and BBC, ITV and Sky for the take-it-or-leave-it deal.
The offer, which stipulates the debate takes place before March 30 -– a full month before the vote -- means the prime minister has ruled out appearing in a head-to-head contest against Ed Miliband, the Labour leader recently accusing Cameron of “wriggling out” of the three debates proposed by broadcasters.
Deputy prime minister Nick Clegg fired the following broadside on Wednesday evening:
Earlier on Wednesday, Miliband posted:
Labour sources accused the Tories of doing everything they can behind the scenes to "scupper the negotiations and sink the debates".
Douglas Alexander, who is leading Labour's general election strategy, said: "We continue to support the broadcasters' proposals, including for seven-way debates alongside a two-way debate. But this is an outrageous attempt from the Prime Minister to bully the broadcasters into dropping their proposals for a head-to-head debate between David Cameron and Ed Miliband. That it comes only hours after Ed Miliband called David Cameron's bluff and said he would debate him any time, any place, shows the lengths David Cameron will go to run scared of a debate with Ed Miliband."
A Ukip spokesman said: "After praising what a good thing debates were for democracy as late as 2014, why is David Cameron now acting chicken and running as far away from them as possible?"
In a joint statement, broadcasters said: "The BBC, ITV, Channel 4 and Sky have received an email from the Prime Minister's office with a proposal. The broadcasters are committed to providing our audiences with election debates. Twenty two million people watched the debates in 2010 and we believe the debates helped people to engage with the election. The broadcasters have set out their proposals and continue to talk to all the relevant parties on an equitable basis. We will respond to the Conservatives' proposal in due course."