Blair also said the government would extend the life of its US-made Trident D5 missile.
The decision keeps Britain in a nuclear club comprised of all five permanent members of the United Nations Security Council - the United States, Russia, China, France and Britain.
Blair argued that Britain needed a deterrent as an insurance policy against future unpredictable threats, particularly given a growing risk from so-called "rogue states".
"It would be unwise and dangerous for Britain, alone of any of the nuclear powers, to give up its independent nuclear deterrent"
British prime minister
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North Korea carried out a nuclear test in October and some countries accuse Iran of seeking an atomic bomb, although Tehran denies it.
India and Pakistan have nuclear weapons and Israel is widely thought to have nuclear arms, but has never confirmed it.
"We cannot be certain in the decades ahead that a major nuclear threat to our strategic interests will not emerge; that there is also a new and potentially hazardous threat from states such as North Korea which claims already to have developed nuclear weapons or Iran which is in breach of its non-proliferation duties," Blair told parliament.
"It would be unwise and dangerous for Britain, alone of any of the nuclear powers, to give up its independent nuclear deterrent," he said.
The Campaign for Nuclear Disarmament (CND) and scores of Labour parliamentarians, however, say Britain is contributing to nuclear proliferation by replacing Trident.
They argue there is no need for a costly deterrent now the Cold war has ended.