The Taoiseach welcomed the initiative and said it followed intensive discussions between himself and Mr Blair over the past two days.
The discussions ended in a 40minute phone call yesterday morning, just hours before Mr Blair's chief of staff contacted both sides in the Drumcree dispute.
Urging both the Orange Order and the Garvaghy Road residents to co-operate in the mediation, Mr Ahern said in upholding their own rights, they must also recognise their responsibility to the wider community.
"It is essential that we find a means on a longer-term basis of resolving this issue which, for the fourth year running, has caused a major rise in tension and created real fear in many parts of the community."
A Government spokesman added last night that the hope was that talks would create a space to allow temperatures to cool.
"We hope the Orange Order will turn the protest down a bit while people are talking," he said.
