"This speech was influenced by extremist thought that blindly follows the Zionist regime," foreign ministry spokesman Hamid Reza Asefi said in a statement read out on state television.

Asefi said Blair was using "opposition to terrorism and nuclear weapons" as a "pretext" to protect Israel.

"The Islamic Republic of Iran has nothing to do with terrorism and is itself a victim of terrorism, and many of it officials have been martyred in combatting this phenomena," he insisted.

"But countries like Britain are supporting the Zionist regime, an overt symbol of government-sponsored terror."

Nevertheless, Asefi shrugged off Blair's remarks by claiming "the British prime minister himself understands his speech is baseless and does not believe what he says."

Earlier Tuesday, Blair told a parliamentary committee that Iran was a backer of terrorist groups and urged the Islamic republic to meet EU demands to renounce its alleged pursuit of nuclear weapons.

"It certainly does sponsor terrorism. There's no doubt about that at all," Blair said, agreeing with US President George W. Bush's view of Iran.

"I hope very much that if we can make progress in the Middle East, that Iran realises that it's got an obligation to help that, not hinder it," he said, referring to Iran's support for Palestinian militant groups.