Blair is using the trip to defend the military campaign
Mr Blair was told by Syrian President Bashar al-Assad that Israel's treatment of the Palestinians was no different to international terrorism.
Mr Blair has now arrived in Saudi Arabian capital Riyadh, where he has met King Fahd and is holding talks with Crown Prince Abdullah and other political leaders.
British officials denied Mr Blair felt snubbed or embarrassed by President Assad's condemnation in Damascus of the military action in Afghanistan - a campaign the prime minister has used his trip to defend.
Mr Assad also stressed extremist groups linked to his country were seeking the liberation of Palestine and could not be classed as terrorists.
'No alternative'
The UK prime minister had conceded it was "difficult" to be the first serving prime minister to visit Syria but said it was essential to "reach an understanding of each other's perspective".
"There is no alternative when all the killing and bloodshed stops. People will have to come back to resolve their differences," he told reporters.
"This is a candid dialogue but this is a dialogue I would like to think would be pursued by us both as people trying to reach an understanding of each other's perspective and trying to work together as partners for the greater good of the wider world."
"We both understand the importance of restarting the peace process," said Mr Blair.
"Getting back to a situation in which distances are resolved by a process of talking and dialogue and that in that regard violence from whatever quarter is deeply unhelpful.
"What we require is the space and time to get people talking together again."
'End violence' call
The prime minister spoke of the need to end "violence of all sorts" in order to give the peace process space and time, but added that "there are going to be differences in perspective and view about these issues".
President Assad repeated condemnation of the 11 September attacks on the US.
But he made clear his country could not address the issue of terrorism separately from Israel's treatment of the Palestinians.
And, to applause from local reporters he went on: "We cannot accept what we see on our television everyday of the bombing of innocent civilians. There are hundreds now every day."
Domestic opinion
Afterwards prime ministerial sources told BBC political editor Andrew Marr that President Assad had been highly engaged and focused on the need to restart the peace process - but like others he had domestic opinion to consider.
They believed it was a big enough step for Mr Assad to stand beside Mr Blair in front of Arab opinion in the first place.
However, Marr said there was no doubt that given President Assad's public pronouncements, Mr Blair endured one of his least enjoyable news conferences for some time.
The prime minister ended his visit to Syria with a trip to the Omayyad Mosque in central Damascus before flying on to Riyadh.