Mr Blair warned against being 'forced into retreat'

Mr Blair told a charity event in New York that Iran was prepared to destabilise peaceful countries.

In his first major speech since leaving office, Mr Blair again defended the decision to go to war in Iraq.

He urged continued vigilance by the United States, Britain and their allies in combating the threat of extremism.

Mr Blair - now an envoy for the Middle East Quartet - warned against being "forced into retreat" as the world faced a situation similar to "rising fascism in the 1920s".

Shared values

The former PM is still regarded as a staunch ally of the US. He was greeted with a standing ovation even before he spoke.

The audience, New York's political and Catholic elite, laughed when he joked that Americans were slowly mastering the English language.

But on a more serious note he spoke of what he called an extremist Islamic ideology.

"This ideology now has a state - Iran - that is prepared to back and finance terror in the pursuit of destabilising countries whose people wish to live in peace."

"There is a tendency even now, even in some of our own circles, to believe that they are as they are because we have provoked them and if we left them alone they would leave us alone.

"I fear this is mistaken. They have no intention of leaving us alone."

Mr Blair stressed the shared values that he believes unite Britain and the US.

"America and Europe should not be divided, we should stand up together.

"The values we share are as vital and true and, above all, needed today as they have been at any time in the last 100 years."

The charity dinner was held in honour of Al Smith, the former governor of New York who was the first Catholic to be nominated by a major political party to run for US president.

The annual event has gained a reputation as a major social gathering in election years, when organisers traditionally invite the presidential candidates to speak.

However New York's two presidential candidates, Senator Hillary Clinton and former Mayor Rudolph Giuliani, did not attend.