Islamist extremism is similar to “rising fascism in the 1920s and 1930s”, Tony Blair said last night in his first major speech since leaving office.

At a prestigious charity dinner in New York, the former Prime Minister said that public figures who blamed the rise of fundamentalism on the policies of the West were "mistaken".

He told the audience, which included New York governor Eliot Spitzer and mayor Michael Bloomberg, that Iran was the biggest exporter of the ideology, and that the Islamic republic was prepared to "back and finance terror" to support it.

“Out there in the Middle East, we’ve seen... the ideology driving this extremism and terror is not exhausted. On the contrary it believes it can and will exhaust us first," he said.

“Analogies with the past are never properly accurate, and analogies especially with the rising fascism can be easily misleading but, in pure chronology, I sometimes wonder if we’re not in the 1920s or 1930s again.

“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.”

He added: “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.

“They have made their choice and leave us with only one to make - to be forced into retreat or to exhibit even greater determination and belief in standing up for our values than they do in standing up for their’s.”

Mr Blair, who represents the Quartet of the US, Europe, Russia and the United Nations on the Middle East, was speaking at the 62nd annual Alfred E Smith Memorial Foundation dinner at the Waldorf Astoria hotel.

Mr Blair went on: “I said straight after the attack of September 2001 that this was not an attack on America but on all of us. That Britain’s duty was to be shoulder to shoulder with you in confronting it. I meant it then and I mean it now.”

He added: “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.”

Mr Blair received three standing ovations during the evening.

Earlier, the former Prime Minister said: “Out of this region the Middle East has been exported a deadly ideology based on a perversion of the proper faith of Islam but nonetheless articulated with demonic skill playing on the fears and grievances of Muslims everywhere.

“It did not originate from the dispute between Israelis and Palestinians, of course, far from it. But this dispute is used to great effect as a means of dividing people, sowing seeds of hatred and sectarianism.

“The impact of this global ideology is now no longer felt simply in the terrorism that afflicts Lebanon or Iran or Palestine. It is there also now in Pakistan, Afghanistan, in India, of course in Europe, in Madrid and London, and in the series of failed attempts to create terror across our continent.

“And here in New York you felt it in the thousands who died and who still mourn their lost ones.”

On several occasions the dinner chairman said he would have liked to see Mr Blair run for US president in 2008.

Referring to the Middle East, Mr Blair said: “The challenge is global, therefore our response must be global.

“Either the argument will be as our enemies want it framed as Islam versus the west. Or it will be as we want it framed as moderates of whatever faith, colour or race against extremism however it manifests itself.”

The dinner, which raises millions of pounds for hospitals, nursing homes and charitable agencies, is 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.

Although unsuccessful, many historians believe the presidential bid paved the way for the candidacy of President John F Kennedy.

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