He said the present system was "detrimental to football" and wants six home-grown players in each starting team at domestic level.
He believes players are missing the opportunity to develop into internationals because places in leading leagues are filled by overseas stars.
European Union law would prevent any widespread restrictions being imposed in member countries, but Blatter believes there is a willingness to overcome this.
"The EU is not against this," he told BBC Radio Five Live. "It has legislation that will not permit it but would not say it is against it. We will discuss this with them.
"The EU has 25 countries and in Europe there are 52 national associations. FIFA has 205 around the world - 25 shouldn't make law for the other 205 countries."
