The White House has insisted former Iraqi president Saddam Hussein was a threat to the US and had weapons of mass destruction capability despite numerous intelligence reports to the contrary released in the past few weeks.
Kay told NBC television: "All I can say is 'denial' is not just a river in Egypt."
A report by the Iraq Survey Group that Kay ran until he quit at the start of 2004, found Iraq had no chemical, biological or nuclear weapons when Bush was claiming Iraq was a "gathering" threat.
"The report is scary enough without misrepresenting what it says," Kay said.
Not a threat
Iraq "was not an imminent and growing threat because of its own weapons of mass destruction", he added.
"All I can say is 'denial' is not just a river in Egypt"
former chief US arms inspector
Bush said on Wednesday there was a risk that Iraq could have transferred weapons to terrorist groups.
But Kay told CNN: "Right now we have a lot of people who are desperate to justify the Bush administration's decision to go to war with Iraq.
"They will focus on issues such as intent. You will also hear that although we haven't found the weapons or manufacturing capability, they could have been shipped across the border.
"You can't ship that which you haven't produced. You can't bury that which you haven't obtained or produced."
"Look, Saddam was delusional. He had a lot of intent. He wanted to be Saladin the Great of the Middle East yet again. He wanted to put Iraq in a pre-eminent position to remove the US from the region," Kay added.
Kay: Saddam had intent but no
capabilities, thus was no threat
"He had a lot of intent. He didn't have capabilities. Intent without capabilities is not an imminent threat.
"There is the issue that remains as to whether the scientists and engineers living in the chaotic, corrupt situation in Iraq might have transferred individually technology to terrorists," he said.
But "that was not the case the administration made".
Saddam gave some information to US interrogators which was used for the report, but Kay said "it's not very credible without further collaboration".
Kay said there was less chance that assessments of Iran's and North Korea's weapons programmes were wrong.
"We in fact have international action and international inspectors confirming the major details of both the Iranian and the North Korean capability.
"In the case of North Korea, we have them practically bragging about it."
Kay said the US would now face a credibility problem because of the Iraq episode.
"The point is not whether we are wrong, but whether anyone will believe us. And indeed, that is the burden we are going to carry forward because of the intelligence failure of Iraq," he said, added that major intelligence reform was needed.
"No one will believe us as long as we haven't changed the system."