"Anecdotally it seems clear that the perception is that it's much worse," she said.
"I think the evidence that we heard from people on the street and indeed the figures we were getting from hospitals, is that there are more people presenting with injuries caused in this way."
She went on: "Because this is almost a new phenomenon - that younger children are carrying knives and, sadly, using them - the statistics are not looking at the right areas.
"They need to broaden what they are looking at."
Mrs Blair called for more high visibility policing, targeting places where officers know youths often carry weapons.
She praised such a project in Hackney, east London.
"If young people think they can carry knives and no-one's ever going to pick them up carrying a knife then they are more likely to take one out," she told the committee.
"Whereas, if they think when they carry a knife that's going to be detected, that may well make a really big difference."
She also said the "glamour" had to be stripped from crime and young people made to realise they could gain respect without carrying a weapon.
'Tough on crime'
Shadow Home Secretary Dominic Grieve said Mrs Blair's comments were "a sad indictment of ten years of failure".
"Tony Blair promised to get tough on crime and its causes but failed to do so.
"Under Labour drugs use, alcohol abuse and family breakdown have increased fuelling crime, especially violent crime.
"As for crime figures being under-reported, one of the reasons people do not believe the government are serious about dealing with youth crime is because their preferred method of measuring crime - the British Crime Survey - has to date not even included crimes involving under 16's.
"Conservatives would deploy more police on the streets to catch and deter violent offenders, ensure more prison places so that serious violent offenders who should be in jail are in jail and tackle the long term causes of crime which lead to so much tragic violence."
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