Depends on how much of the thread is visible above the block ? If there is a bit, you could try mole grips, or file some flats on it and use a spanner.
If it is flush with the block, you will need a screw extractor kit. Basically you just drill a hole in the middle of the bolt, and the extracter screws into the middle ( it has a left hand thread ). Then when it is tight, you should be able to spanner the extractor and the bolt will come out ( in theory
)
The other alternative like you said above is to completely drill the bolt out and re-tap it. Have to be careful though, as it usually leaves a 'sloppy' hole ( oo-er missus
)