Blue collar workers are usually those that perform manual labor and hourly wages. Some examples are those working in manufacturing plants, mining, (rail)road construction, and building (houses, ships etc).

White collar workers are those working in clerical, administrative and management jobs. They are in general higher educated, working in 'services' jobs, and work on a fixed salary.

According ot Wikipedia, this is their origin:
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The term "white collar" was first used by Upton Sinclair, an American writer, in relation to modern clerical, administrative and management workers during the 1930s. Sinclair's usage is related to the fact that during most of the nineteenth and twentieth centuries, male office workers in European and American countries almost always had to wear white, collared dress shirts.
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The simplest difference is this: Blue collar will get their hands dirty, white collar workers won't.

Blue color workers actually produce things. White-collar workers live off of the physical work done by others. More and more of this is being outsourced to China and India.

Blue-collar worker
http://upload.wikimedia.org/wikipedia/commons/thumb/6/6a/Boilersuit.jpg/180px-Boilersuit.jpg
"A blue-collar worker is a member of the working class who typically performs manual labor and earns an hourly wage. Blue-collar workers are distinguished from those in the service sector and from white-collar workers, whose jobs are not considered manual labor.
Blue-collar work may be skilled or unskilled, and may involve manufacturing, mining, building and construction trades, mechanical work, maintenance, repair and operations maintenance or technical installations. The white-collar worker, by contrast, performs non-manual labor often in an office; and the service industry worker performs labor involving customer interaction, entertainment, retail and outside sales, and the like."

while

White-collar worker
"It refers to a salaried professional or an educated worker who performs semi-professional office, administrative, and sales coordination tasks, as opposed to a blue-collar worker, whose job requires manual labor. "White-collar work" is an informal term, defined in contrast to "blue-collar work".'

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Blue-collar worker
A blue-collar worker is a working class employee who performs manual or technical labor, such as in a factory or in technical maintenance "trades", in contrast to a white-collar worker, who does non-manual work generally at a desk.
Originally it referred to the dress codes of workplaces. Industrial blue-collar workers formerly, and to a large extent still, wear "work clothes" with the shirts of a navy blue color. The clothes are more durable and may scraped or soiled at work.

White-collar worker
White-collar workers perform tasks which are less "laborious" yet often more highly paid than blue-collar workers, who do manual work. They are salaried professionals (such as some doctors or lawyers), as well as employees in administrative or clerical positions. In some studies managers are considered as part of the white-collar worker grouping, in others they are not. The name derives from the traditional white, button down shirts worn by workers of such professions.
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