He described Labour under Jeremy Corbyn as pushing “a set of policies that takes us back to the Sixties”.
The former Prime Minister, who many in his party regard as toxic because of the Iraq war, recently announced that he would be scaling back his business empire in order to focus on charity work.
But he also refused to rule out a return to politics.
Mr Blair said: “It’s a tragedy for British politics if the choice before the country is a Conservative government going for a hard Brexit and an ultra-left Labour Party, that believes in a set of policies that takes us back to the Sixties.
“In the UK at the moment you’ve got a one-party state.
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“When you put it all together (taking into account that the Conservative leader wasn’t elected), there’s something seriously wrong.
“I don’t know if there’s a role for me … there’s a limit to what I want to say about my own position at this moment.
“All I can say is that this is where politics is at. Do I feel strongly about it? Yes, I do. Am I very motivated by that? Yes.
“Where do I go from here? What exactly do I do? That’s an open question.”
When Sky’s Jason Farrell took a cardboard cut out of Tony Blair to the Labour conference and some of its supporting events, there were few words of praise for the former leader who had won the party three elections.
At a festival held by Momentum, whose members make up many of those who have joined the Labour Party in the last few years, Farrell and the cutout were escorted out through the back entrance.
It is not exactly clear what role he could take as many of those who are regarded as Labour’s Blairites are now on the backbenches and have little ability to influence the direction the party is taking.
Mr Blair said Labour had shifted from a party of government to an “ultra-left” culture “which believes that the action on the street is as important as the action in Parliament”.
He added: “It’s a huge problem because they live in a world that is very, very remote from the way that broad mass of people really think.
“The reason why the position of these guys is not one that will appeal to an electorate is not because they’re too left or because they’re too principled – it’s because they’re too wrong.
“The reason their policies shouldn’t be supported isn’t because they’re wildly radical, it’s because they’re not.
“They don’t work. They’re actually a form of conservatism. This is the point about them. What they are offering is a mixture of fantasy and error.”
In the interview, which is believed to have been carried out before Theresa May talked of taking the centre ground for the Conservatives, Mr Blair said he believed there was still a future for views similar to his.
He said: “There’s been a huge reaction against the politics I represent, but I think it’s too soon to say the centre has been defeated. Ultimately I don’t think it will. I think it will succeed again.
“The centre ground is in retreat. This is our challenge. We’ve got to rise to that challenge.”