But he defended the war, saying that failing to remove Saddam Hussein would have entailed far worse consequences for the country.
Speaking to the BBC's Newsnight before the 10th anniversary of the invasion, he said: "There are still terrorist activities that are killing … innocent people for no good reason, but [Iraq's] economy is growing very strongly, it's got huge amount of oil revenue but, no, there are still big problems."
Blair added that the price of the invasion that saw the death of at least 100,000 civilians and 179 British soldiers was "very, very high" but implored people to ask what would have happened had Saddam not been deposed.
Asked whether he minded if "people call you a liar, some people call you a war criminal, protesters follow you, it's difficult to walk down the street in a country", he replied: "It really doesn't matter whether it's taken its toll on me."
Blair added that he had "long since given up trying to persuade people it was the right decision".
"If we hadn't removed Saddam from power just think, for example, what would be happening if these Arab revolutions were continuing now and Saddam, who's probably 20 times as bad as Assad in Syria, was trying to suppress an uprising in Iraq. Think of the consequences of leaving that regime in power," he told presenter Kirsty Wark, as part of a one-hour special broadcast on Tuesday night.
"So when you say 'do you think of the loss of life since 2003', of course I do, you would have to be inhumane not to, but think of what would have happened if he had been left there."
"In a sense what I try to persuade people of now is to understand how complex and difficult a decision it was because I think if we don't understand we won't take the right decision about what I think will be a series of these types of problems that will arise over the next few years.
"You've got one in Syria right now, you've got one in Iran to come, the issue is how do you make the world a safer place?"
Blair insisted that there was still a long conflict ahead and that Britain could not avoid getting involved.
"We are in the middle of this struggle, it is going to take a generation, it is going to be very arduous and difficult. But I think we are making a mistake, a profound error if we think we can stay out of that struggle because we are going to be affected by it whether we like it or not."
Former Liberal Democrat leader Sir Menzies Campbell MP said: "Tony Blair's defensiveness over Iraq is easily understood.
"But the fact remains that he made two cardinal errors. First by allying himself too closely to the policies of George W Bush and second by ignoring the fact that Bush's objective of regime change was contrary to the Charter of the United Nations and illegal.
"Ten years on, it is almost impossible to find anyone in this country or even in the United States who is willing to support the military action against Saddam Hussein."
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