Tony Blair has publicly agreed with the opinion that the violence in Iraq since the 2003 invasion has been a disaster.
The UK prime minister was responding to a question by Sir David Frost in an interview on the new al-Jazeera English-language Arabic TV channel.
The Liberal Democrats said Mr Blair had finally accepted the enormity of his decision to go to war in Iraq.
But Downing Street insisted his views had been misrepresented and that he had not made "some kind of admission".
'Not accident in planning'
A spokesman said the prime minister often agreed with interviewers when he responded to their questions.
Mr Blair was challenged by Sir David over the violence in Iraq, saying it had "so far been pretty much of a disaster".
The prime minister replied: "It has, but you see what I say to people is why is it difficult in Iraq?
"It's not difficult because of some accident in planning.
"It's difficult because there's a deliberate strategy - al-Qaeda with Sunni insurgents on one hand, Iranian-backed elements with Shia militias on the other - to create a situation in which the will of the majority for peace is displaced by the will of the minority for war."
The interview comes as Chancellor Gordon Brown met UK troops on his first visit to Iraq, and promised an extra £100m ($188m) over three years to help rebuild the country's economy.
Commenting on the al-Jazeera broadcast, Liberal Democrat leader Sir Menzies Campbell said: "At long last the enormity of the decision to take military action against Iraq is being accepted by the prime minister.
"It could hardly be otherwise, as the failure of strategy becomes so clear."
Downing Street insisted it was not Mr Blair's view that the violence in Iraq had been a disaster.
A spokeswoman said: "He was simply acknowledging the question in a polite way before going on to explain his view.
"To portray it as some kind of admission is completely disingenuous."
But BBC political editor Nick Robinson said Mr Blair's agreement indicated he knew there was "simply no point any more arguing with interviewers".
"Tony Blair knows that's an argument that has already been lost," he added.
"He wishes instead to focus on the argument about who's to blame for the disaster - insurgents he insists - and what should be done now - staying there until 'the job is done', he will continue to argue."
In the interview, Mr Blair stressed the importance of progress in the Middle East peace process in winning the "war on terror".
He said it would cut support for Muslim extremism and added the issue was the "most important" thing for him before he leaves office.
Syria and Iran could play a "constructive" role in the Middle East, Mr Blair added, and it was absurd to suggest that talking to the countries amounted to "appeasement".
When asked about UK troops in Iraq, he said: "We have said that we will stay as long as the Iraqi government needs us to do so."