In an artful address to delegates, the 75-year-old Swiss also said FIFA's Ethics Committee would be reinforced and empowered to punish any wrong-doers with its members selected by the full Congress as well.
World football's governing body has been left bloodied by a series of bribery and corruption allegations over the last few months, and Blatter said "the evils" affecting FIFA had stemmed from last December's decision to award 2018 and 2022 World Cups to Russia and Qatar.
He said the situation FIFA now found itself in was "undignified" and, to applause from the hall, said he would work to prevent FIFA form ever being in this position again.
In the space of the few days leading up to the 61st congress, Qatar was tainted by suggestions it had bought the 2022 World Cup; the head of Asian football, Mohamed Bin Hammam, and CONCACAF chief Warner were suspended over bribery allegations; and Bin Hammam withdrew from the presidential race, leaving Blatter to run unopposed.
A proposal by England to delay Wednesday's presidential election was earlier defeated by 172-17 votes.
The most revealing part of a fairly low-key speech from the usually more upbeat Swiss regarded the designation of future World Cups - although none are due to be awarded until around 2017 or 2018 when the hosts for the 2026 finals will be allocated.
ROCKY WATERS
"Where does all this evil come from which is now in FIFA," he asked before answering: "It has to do with the popularity of our competition, the flagship competition, the World Cup, the attribution of the World Cup and everything around the December 2 2010 vote, kicked off a wave of accusations, proposals, allegations, criticism and they are still coming.
"For this reason I say we are no longer on a pyramid, we are on a ship and the ship is moving through troubled, rocky waters.
"Why? Because it is the social and political value of the World Cup. It is our duty to react.
"First, is it correct that the attribution of the World Cup is done by the Executive Committee? In one of the interventions we have heard it was said we should empower the associations, and I am 100 percent in agreement, and in future the hosting of the World Cup will be decided by the Congress.
"The Executive Committee will create a shortlist and make no recommendations, then the Congress will decide on the venue."
Congress last decided the venues of future World Cups in 1966, when it agreed three World Cups on the same day for 1974, 1978 and 1982.
That system was changed in the early 1970s when Joao Havelange became president and has existed until the present day.
Blatter also said that while he was prepared to face the public's anger over the recent corruption scandals, FIFA needed to take stronger action against wrong-doers, adding: "We have the ethics committee.
"This committee has spoken about zero tolerance. Is it enough to speak? No, we need facts, action. So if we do have
