"We were proud of your contribution to Britain before last Thursday. We remain proud of it today. Fanaticism is not a state of religion, but a state of mind.
We will work with you to make the moderate and true voice of Islam heard as it should be," he told the House of Commons on Monday while speaking at the parliament for the first time following devastating four bomb blasts which tore apart London's underground system last Thursday killing 52 people and injuring 700, 58 of them still being treated at different hospitals for serious injuries.
Blair said British people were fully aware "the overwhelming majority of Muslims" stand along with the rest of the community on this occasion.
"It seems probable that the attack was carried out by Islamist extremist terrorists of the kind who over recent years have been responsible for so many innocent deaths in Madrid, Bali, Saudi Arabia, Russia, Kenya, Tanzania, Pakistan, Yemen, Turkey, Egypt and Morocco, of course in New York on September 11, 2001 but in many other countries too," said Blair.
Refusing to divulge details of the police investigation, Blair said, "it is among the most vigorous and intensive this country has seen."
"We will pursue those responsible not just the perpetrators but the planners of this outrage, wherever they are and we will not rest until they are identified, and as far as humanly possible, brought to justice," he said.
He said British people were united in their determination that "our country will not be defeated by such terror but will defeat it and emerge from this horror with our values, our way of life, our tolerance and respect for others, undiminished".
Blair expressed his deep appreciation for "the huge outpouring of international support for London and for Britain over these past days."
"The G8 leaders demonstrated complete solidarity and also commented with an awe that gave me a lot of pride in Britain, on the courage of our capital city and its people," he said.
He said the UN Security Council passed a unanimous resolution to condemn terrorists attack and expressed support for Britain. Messages have been received world-wide while immediate offers of help were made by all the world's main intelligence agencies, the British Prime Minister said.
Fifty-two people are confirmed dead, but Blair indicated that the toll will significantly rise in the coming days when he revealed that police liaison officers now were at the side of 74 families.
"The timing of the Tube explosions was designed to be at the peak of the rush hour and thus to cause maximum death and injury," he told the House of Commons, using the popular name for London's Underground system.
Blair made a similar claim within hours of the attacks, which coincided with the Group of Eight summit of rich nations at Gleneagles in Scotland, and a day after London was awarded the Olympic Games in 2012.
Earlier in the day, Blair's spokesman said the government was keeping an "open mind" pending the outcome of the investigation.
Blair confirmed that three of the bombs, all on subway trains, had gone off within 50 seconds at the peak of morning rush hour, and that their timing was designed to cause "maximum death and injury".
The fourth bomb went off just under an hour later on a double-decker bus.
The intensive police operation now under way to find the bombers and bring them to justice for the deadliest attacks on British soil since World War II was "among the most vigorous and intensive this country has ever seen," he said.