I cant tell you how frustrated i felt sometimes, when i lost the pics i had uploaded on Blogger on deleting a particular post. Google seems to have done its homework with this latest feature though, Picasa Web which can be visited on picasaweb.google.com will now show your blogger uploaded photos as albums. There will be a separate album for each blog with the name of the blog as the Album name.
However the bad news is that only the newer photos which were uploaded after Picasa Web was introduced will be available, but atleast its a start. The photos are linked via the Google account you use on Blogger.
But a word of caution, as i learnt the hard way, you cant save space by deleting these photos off of Picasa, turns out its deleted from your blog as well, so dont even try 
Here is the official word from Picasa (or Google !) , pretty much everything has already been covered above, but its OFFICIAL 
When you create a blog that contains photos using Blogger, a web album will be created in Picasa Web Albums. Any photos you upload using Blogger automatically appear in an unlisted album under “My Photos” with a small Blogger icon in the corner of the album cover.
The title of your Blogger web album will match the title of that blog and contain those photos. If you re-title your blog, the web album title will not change.
Once a photo is posted to Blogger from Picasa Web Albums, future comments or captions made on either site will not be synched with each other. We recommend that you add captions and comments in Picasa Web Albums before posting a photo to Blogger.
If you delete a photo from Blogger it will also be deleted from Picasa Web Albums. Likewise, if you delete a photo from your Blogger album on Picasa Web Albums, the photo will also be deleted from your blog.
Please note that you cannot upload photos directly to a Blogger web album using the Picasa Web Albums site at this time.
