Tony Blair has said Iran poses a "major strategic threat" to the Middle East and is "deliberately causing" problems.
At his monthly media briefing the prime minister said the Iranian regime was "deeply extreme".
He called the Holocaust conference in Iran this week, which had speakers including an ex-Ku Klux Klan leader, "shocking beyond belief".
Mr Blair also played down suggestions current problems in Iraq were caused by US decisions after Saddam's fall.
"Iran is deliberately causing maximum problems for moderate governments and for ourselves in the region - in Palestine, in Lebanon and in Iraq."
He said there was "little point" in including Iran and Syria in regional issues, such as Iraq, "unless they are prepared to be constructive".
"There is no point in hiding the fact that Iran poses a major strategic threat to the cohesion of the entire region," Mr Blair told reporters.
There were "major, major problems" in Iraq, Lebanon and Palestine, but "all of this is now overshadowed by the issue of Iran".
He said it would be a "major challenge" to deal with Iran.
Describing a "deadlock" over the Palestinian situation, Mr Blair said: "You only have to see what is happening in Iran in the past couple of days to realise how important it is that all people of moderation in the Middle East try to come together and sort out the problems.
"There literally could be nothing more important on the international agenda at the moment than that."
Asked about the Iraq Study Group's report, published in the US last week, Mr Blair said it was still the intention to withdraw British troops once Iraqi authorities were able to take over.
"I certainly do not take the Study Group as saying that we should get out, come what may.
"What they are saying is that we have to increase our driving up of the capability of the Iraqi forces, because it's obviously better that the Iraqis themselves take responsibility and indeed the Iraqi government is increasingly saying it wants to take responsibility.
"Then the coalition forces will still be in a support role but it won't be the same as it is at the moment."
He said the situation for UK troops in Basra was different from that for US troops in Baghdad, where there was more sectarian violence, but the UK withdrawal would not be affected by US decisions.
"If and when they [US troops] are able to change the situation in Baghdad, then they too will be in a different set of circumstances, but the pace at which both of those things may happen may be different," Mr Blair said.
Mr Blair was also asked about ex-defence secretary Geoff Hoon's suggestion recently that the UK had not wanted the Iraqi army disbanded after Saddam Hussein's fall.
Mr Blair said: "The principal reason we are having a problem in Iraq is because people are deliberately giving us a problem.
"There's sometimes a sense in which, it's as if, if only we sort of had a different post-conflict strategy, somehow we could have avoided this problem.
"This problem hasn't originated naturally. It's originated as a result of the deliberate outside interference linking up with internal extremism."