"Change which in my opinion is crucial if this organisation is to regain its credibility.
"I congratulate my friend Prince Ali for his admirable campaign and I take the opportunity to thank all the national associations who supported him."
One of FIFA's main sponsors Coca-Cola urged Blatter to use the chance to win back some of the lost trust in his organisation.
"FIFA must now seize the opportunity to begin winning back the trust it has lost," said the soft drinks giant in a statement.
"We urge FIFA to take concrete actions to fully address all of the issues that have been raised, in a swift and transparent manner."
Wolfgang Niersbach, president of the German Football Association (DFB), who had also supported the Jordanian prince, said senior European figures had hoped for a change of leadership within FIFA.
"After the events of last week, a headwind had been felt, but at the end it wasn't strong enough to bring about the desired change amongst us," said Niersbach, who was voted onto FIFA's executive committee on Friday.
"There was a prevailing impression within UEFA that Prince Ali had a chance."
The German boss said he did not expect Blatter to change his leadership style despite promises to hand football's governing body over in a 'stronger' position when he steps down in 2019.
"At 79 years of age, you have already developed your style," said Niersbach dryly.
"My biggest worry is that we won't manage to bring some calm.
"We need FIFA to be strong, but that will be unbelievably difficult."
And USA Soccer president Sunil Gulati said his organisation will continue the push for change within FIFA: "Our goal is for governance of FIFA that is responsible, accountable, transparent and focused solely on the best interests of the game."
Greg Dyke, the chairman of the English Football Association, said Blatter had been given a fright by Prince Ali's challenge.
"Blatter's had a shock today. This hasn't happened to him for 16 years," said the FA boss.
"A third of the delegates said we don't want Blatter to continue.
"They've said 'we've had enough of you, we've had enough of corruption'.
"This is a fundamentally corrupt organisation and Sepp Blatter is not the man to change that. This needs root and branch reform."
-AAP