The former Labour prime minister said it was “a tragedy” that the two choices facing the electorate were the Tories pursuing a hard Brexit and “an ultra-left Labour Party” which has “a set of policies that takes us back to the Sixties”.
Mr Blair recently announced that he would be significantly scaling back his business empire in order to focus on charity work.
And, in an interview with Esquire magazine, he refused to rule out a return to politics.
Mr Blair said: “It’s a tragedy for British politics if the choice before the country is a Conservative government going for a hard Brexit and an ultra-left Labour Party, that believes in a set of policies that takes us back to the Sixties.
“In the UK at the moment you’ve got a one-party state.
“When you put it all together (taking into account that the Conservative leader wasn’t elected), there’s something seriously wrong.
“I don’t know if there’s a role for me ... There’s a limit to what I want to say about my own position at this moment.
“All I can say is that this is where politics is at. Do I feel strongly about it? Yes, I do. Am I very motivated by that? Yes.
“Where do I go from here? What exactly do I do? That’s an open question.”
Mr Blair said Labour had shifted under Jeremy Corbyn’s leadership from a party of government to an “ultra-left” culture “which believes that the action on the street is as important as the action in Parliament”.
He added: “It’s a huge problem because they live in a world that is very, very remote from the way that broad mass of people really think.
“The reason why the position of these guys is not one that will appeal to an electorate is not because they’re too left or because they’re too principled - it’s because they’re too wrong.
“The reason their policies shouldn’t be supported isn’t because they’re wildly radical, it’s because they’re not.
“They don’t work. They’re actually a form of conservatism. This is the point about them. What they are offering is a mixture of fantasy and error.”
Mr Blair’s New Labour won three general elections by moving the party closer to the centre ground of British politics.
“There’s been a huge reaction against the politics I represent,” said Mr Blair.
“But I think it’s too soon to say the centre has been defeated. Ultimately I don’t think it will. I think it will succeed again.
“The centre ground is in retreat. This is our challenge. We’ve got to rise to that challenge.”