He told the inquiry that the perception of risk from rogue or failed states changed after the September 11, 2001, attacks on the US.
"When I talked earlier about the calculus of risk changing after September 11, it's really important I think to understand in so far as to understanding the decision I took, and frankly would take again," Blair said.
Hundreds of protesters, including anti-war campaigners and the families of some of the 179 soldiers who have died in Iraq, gathered outside the building where Blair was giving evidence.
Despite the fact weapons of mass destruction were never uncovered by UN inspectors, Blair said he remained convinced that Saddam had the capability.
"He [Saddam] had used them, he definitely had them ... and so in a sense it would have required quite strong evidence the other way to be doubting the fact that he had this programme," Blair said.
"The decision I had to take was, given Saddam's history, given his use of chemical weapons, given the over one million people whose deaths he caused, given 10 years of breaking UN resolutions, could we take the risk of this man reconstituting his weapons programme?"
The inquiry is Britain's third major investigation into the conflict. It was set up last year by Gordon Brown, who took over from Blair as the UK's prime minister, to learn lessons from the conflict.
Vincent Moss, political editor of the Sunday Mirror newspaper, told Al Jazeera the inquiry could have been tougher on Blair, whose decision to send 45,000 troops to Iraq sparked protests in Britain and around the world.
"A lot of ground wasn't covered, and in my mind it wasn't covered in enough detail, particularly the dodgy dossier in September 2002.
"There wasn't very much interrogation on that, they pretty much accepted what Tony Blair said about the intelligence. We could have had an awful lot stronger questioning on that," he said.
In a foreword to the so-called dodgy dossier, it was said that possession of chemical and biological weapons by Saddam was "beyond doubt" and that he could deploy them within 45 minutes.
But the inquiry has already heard from senior civil servants, who said intelligence in the days before the invasion indicated that Saddam's "weapons of mass destruction" had been dismantled.
Blair on Friday dismissed the controversy over the dossier, saying "it was actually received as dull and cautious at the time".
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"It really assumed a vastly greater importance at a later time precisely because of the allegation, which was an extraordinarily serious one that we, Downing Street, had deliberately falsified the intelligence which of course we hadn't."
The inquiry pressed Blair on evidence given earlier this week by two former legal advisers to the foreign office, who said there was no lawful basis for war.
Michael Wood, one of the former advisers, told the inquiry said that UN resolution 1441, which gave Saddam a final chance to give up his weapons of mass destruction, did not provide a case for military action.
But Blair said the advice of Peter Goldsmith, the attorney-general at the time, made it clear that 1441 justified the use of force against Saddam.
"What was so important to me about resolution 1441 was not simply that it declared Saddam in breach but it said also that a failure to comply unconditionally and immediately and fully with the inspectors was itself a material breach," he said.
"If [Goldsmith] in the end had said this cannot be justified lawfully, then we would have been unable to take action."
Goldsmith told the inquiry earlier in the week that he had initially believed a second resolution was needed to justify conflict, but changed his mind after consulting with lawyers in the US.
Blair dismissed any suggestions that Goldsmith had been pressured into changing his opinion, saying: "Anybody who know Peter knows he would not have done it unless he believed in it and thought it was the correct thing to do."
The five-member panel also asked Blair when exactly he offered George Bush, the then-US president, support for an invasion.
|Blair said it was not the UK or US forces who were carrying out the Iraq killings [AFP]
"The only commitment I gave - and I gave this very openly at the time - was a commitment to deal with Saddam," he said.
Earlier witnesses had claimed Blair had promised support in 2002, more than a year before Britain's parliament approved military action.
Ahmed Rushdi, an Iraqi journalist, told Al Jazeera he was not surprised by Blair's defence of the invasion.
"A liar is still a liar," he said.
Rushdi also said that removing Saddam had done little to help ordinary Iraqis.
"Before 2003 there were problems with security, infrastructure and services, and people died because of the sanctions, but after 2003 there are major disasters," he said.
"After six years or seven years there is no success on the ground, in any aspect."
Blair acknowledged that Britain bore some "responsibility" for the breakdown in security in Iraq since the invasion, but noted that it was not the US and British forces carrying out the killing.
"The ones doing the killing were the terrorists, the sectarians, and they were doing it quite deliberately to stop us making the progress we were trying to make," he said.