Mr Blair (L) said others had envisaged a "worst-case scenario" in Iran
Iran has no weapons-grade uranium, US military officials have said in an attempt to clarify recent statements from Washington and Israel.
National Intelligence director Dennis Blair told US senators that Tehran had only low-enriched uranium, which would need processing to be used for weapons.
He said Iran had "not yet made that decision" to convert it.
Mr Blair also said al-Qaeda was weaker now than a year ago thanks to sustained pressure on militant bases in Pakistan.
'Crossed the threshold'
Iran says its nuclear programme is entirely peaceful, but the West has long suspected the country of seeking atomic weapons.
Mr Blair's comments came a week after Adm Mike Mullen, chairman of the Joint Chiefs of Staff, said Iran had enough "fissile material" to make a bomb.
And earlier this week Israel's top intelligence official Amos Yadlin said Iran had "crossed the technological threshold" and was now capable of making a weapon.
But in his evidence to the Senate Armed Services Committee, Mr Blair said the Israelis were envisaging a "worst-case scenario".
"We assess now that Iran does not have any highly enriched uranium", he said.
Although analysts broadly agreed that Iran had some low-enriched uranium, the enrichment process to produce weapons-grade material would involve technology that the country is not thought to possess, Mr Blair added.
Defense Intelligence Agency director Lt Gen Michael Maples, testifying before the same committee, said Israel and the US had the same information but had come to different conclusions.
"The Israelis are far more concerned about it," he told the committee.
The BBC's Kevin Connolly in Washington says the tone reflects President Barack Obama's wish to reach out diplomatically to Tehran.
Meanwhile, Mr Blair gave an upbeat assessment of the battle against al-Qaeda.
He said air strikes and raids carried out by the US and their allies in Pakistan's tribal areas, near the Afghan border, had killed a number of al-Qaeda leaders.
He said this, combined with Muslim opinion turning against the organisation, had made the group less capable of launching attacks.
But the BBC's security correspondent, Frank Gardner, says analysts suspect that US intelligence may be underestimating the radicalising effect of the recent conflict in Gaza - in which Palestinian deaths outnumbered Israeli ones by 100 to one.