"Just as it is, in significant part, forces outside Iraq that are trying to create mayhem inside Iraq, so we have to have a strategy that pins them back, not only in Iraq but outside it too," Tony Blair said in London on Monday.
"In Iraq, the pressure from such terrorism has changed the nature of the battle. Its purpose is now plain: to provoke civil war.
"The violence is not therefore an accident or a result of faulty planning. It is a deliberate strategy.
"It is the direct result of outside extremists teaming up with internal extremists - al-Qaeda with the Sunni insurgents, Iranian backed Shia
militia - to foment hatred and thus throttle at birth the possibility of non-sectarian democracy.
Pressure is growing on Blair to withdraw UK troops from Iraq
"This is crucial to our understanding of the right strategy to combat it. The majority of Iraqis don't want this extremism - they showed that when they voted for an explicitly non-sectarian government. But the terrorists are trying to propel them towards it.
"A major part of the answer to Iraq lies not in Iraq itself but outside it, in the whole of the region where the same forces are at work, where the roots of ...global terrorism are to be found, where the extremism flourishes."
Blair went on to say that violence in Iraq could be addressed by resolving the Israeli-Palestinian conflict.
Blair's comments came as George Bush, the US president, reaffirmed that the US would not talk to Iran unless Tehran suspended its uranium enrichment programme.
"If the Iranians want to have a dialogue with us, we have shown them a way forward, and that is for them to verifiably suspend their enrichment activities," said Bush, speaking after meeting Ehud Olmert, the Israeli prime minister, in Washington on Monday.
Iran is suspected of funding, training and arming several of Iraq's Shia factions, including some believed to run death squads against Iraq's Sunnis.
Calls for withdrawal
Bush has also reacted skeptically to the Democrats call for a phased troop withdrawal.
Since the Democrats became the majority party in the US congress in last week's midterm elections, they had stepped up their calls for Bush to withdraw from Iraq.
US troops have taken heavy casualties in Iraq in recent weeks
Carl Levin, a Michigan Democrat who will become chairman of the Senate Armed Services Committee in January, has led the calls for a withdrawal.
"We've got to put greater responsibility on the Iraqis and that the way to do that - probably the only way to do that - is to let the Iraqis know that within four to six months of the president notifying them, that we're going to begin a phased redeployment of our troops out of Iraq," he said.
On Monday, Bush met members of a bipartisan panel expected to pressure him to change US strategy in Iraq.
The independent Iraq Study Group, led by James Baker, a Republican former secretary of state with close ties to the Bush family, will report to Bush and the US congress next month.