There is "no obvious limit" to the number of immigrants who could settle in the UK, the home secretary has said.
Legal migrants bring valuable skills, says Blunkett
David Blunkett agreed some people felt swamped by new arrivals, but said legal migrants brought economic benefits.
He said Britain had always been "crowded", and the current net inflow of 172,000 a year was sustainable.
Campaign group Migration Watch attacked his comments, saying this rate plus illegal entries meant two million more people by 2013.
This would have a "huge impact" on the country, it said.
The latest official migration estimates, published hours after Mr Blunkett's comments, suggest the inflow - the difference between the numbers leaving the UK and those arriving - fell slightly to 153,000 in 2002.
Speaking on BBC Two's Newsnight, Mr Blunkett said he was determined to cut the numbers of asylum seekers and illegal immigrants entering the UK.
But he wanted more skilled workers to come to Britain legally to plug staff shortages - especially in the catering, hospitality and construction industries.
Asked whether there was any limit on the number of skilled
migrants who could arrive, Mr Blunkett said: "No, I see no obvious limit.
"I see a balance in terms of the different forms of entry, migration and residency
in this country so that we can get it right."
He said he did not believe there was a maximum population which could be
housed in the country, saying: "I don't think there is."
Current migration rates were "permanently sustainable" as long as illegal immigration was under control, he added.
Economic migrants contributed £2.5bn more in taxes than they took out in benefits, he said.
"If we can get it in balance and make sure that there is a net increase in
terms of our GDP, we are onto a winner," he said.
He added: "It is a crowded island. We've always been a crowded, vigorous
Sir Andrew Green, of Migration Watch, said he was "astonished" by Mr Blunkett's comments.
"We have no problem with moderate and managed migration. The problem is that
it is neither moderate nor managed," he said.
The official Home Office figures, plus illegal immigration, meant at least two million people would be entering the UK over the next 10 years, he said.
"England is nearly twice as crowded as Germany, four times as crowded as
France, 12 times as crowded as the US. I can't think what they are doing."
Shadow home secretary David Davis suggested the government was encouraging legal migration "as a way to cover up their failure to tackle widespread
abuse of the asylum system".
He said changes to immigration policy should take place only after a debate about the economic, social and environmental consequences.
But Keith Best of the Immigration Advisory Service praised the Home Secretary, saying he believed the comments would ultimately "flush out" those using misleading statistics to oppose migration.
"It's a pity that David Blunkett did not say this earlier," said Mr Best.
"It is business which wants the workers and the govenrmen's job is to facilitate this.
But the biggest commitment Mr Blunkett needs to make is to improve the statistics so we can have a rational debate."