The former Prime Minister is set to take up a role teaching a “faith and globalisation” course at Yale University.
Facing a range of questions, although none about his successor Gordon Brown’s current problems, Mr Blair appeared uncomfortable at times.
Asked in retrospect if the Iraq war was a strategic misjudgment, Mr Blair said: “When you go back and you look at the situation at the time and the bloodshed that there’s been and the difficulty, I would have been shocked but I would have asked the question ‘Why has this come about? Why has it been so hard?’
“Because after all, Saddam was removed more than five years ago but since then you’ve been fighting the type of battle against the same type of people that you’ve been fighting all over that region.”
Stewart, the hugely popular host of the Emmy-winning programme, repeatedly asked Mr Blair on the success of his Middle East policies.
He replied: “None of this is easy, OK.
“Whether it’s Yemen or Algeria or Palestine or Pakistan there’s a struggle going on. There was September 11. That in my view changed everything.”
Speaking on his relationship with US President George W Bush, Mr Blair said: “Here’s something that I find always goes down well particularly back home. I like him.”
Stewart quipped: “Did he understand the time difference, or would your phone ring and it would be, like, four in the morning, and he would be, like, Tony you gotta turn on Channel 4, there’s a snake eating an egg?”
Blair added of his relationship with the President: “I’m not a fair weather friend. We went through a lot together and also I think it’s important that my country and your country, whatever our little difficulties in the past, stick together.”
Mr Blair also said his conversion to Catholicism, made last year after he stepped down from office, would have been “complicated” while he was still prime minister.
Speaking in earlier interview with the Yale Daily News, the university’s newspaper, Mr Blair said of his upcoming role: “I’m sort of a bit nervous for it, really.
“I was never a star student, and I’m coming along mixing with a whole lot of people who I’m sure are a whole lot more clever and smarter than I am.”
Stewart’s satirical programme has become extremely influential among US viewers.
His show attracts 1.8 million viewers a night, compared to CNN’s highest rated politics show which draws 1.2 million.
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