London (CNN) -- Former British Prime Minister Tony Blair has told the country's inquiry into the war in Iraq the world must continue to confront Islamic extremism.
Appearing before the panel in central London for the second time, Blair said it was impossible to manage the threat from extremists.
"The single most difficult thing we have to face today -- and we face it still -- is the risk of this new type of terrorism and extremism based on an ideological perversion of the faith of Islam combined with technology that allows them to kill people on a large scale.
"Although this is a time where many people think this extremism can be managed, I personally don't think that is true. I think it has to be confronted and changed."
Earlier, scores of anti-war protesters gathered outside the venue where the inquiry is taking place, waving placards and chanting: "Justice prevail: Blair in jail" and "Blair lied - thousands died."
Some, wearing Tony Blair masks, carried out mock 'arrests', seizing people pretending to be the ex-PM on suspicion of war crimes.
The Chilcot Inquiry, led by a longtime British civil servant, has wide authority to investigate British involvement in the Iraq war.
Blair first testified to the inquiry in January of last year. On Friday, chairman John Chilcot said the former PM had been recalled to "clarify" aspects of events surrounding the invasion in March 2003.
Blair is expected to face questions over whether he pressured his then Attorney General, Peter Goldsmith, to endorse the legality of the war.
As the hearing got under way, he was challenged by panel member Martin Gilbert as to whether he regretted comparing the threat from Saddam Hussein's regime to Nazi Germany in the 1930s.
Blair conceded he should not have implied the circumstances were the same, but insisted he still believed the "calculus of risk" had altered in the wake of the 9/11 attacks in the United States in 2001.
Blair said his Cabinet ministers realized from early 2002 that the Government had embarked on a policy that would probably lead Britain to war.
Panel member Roderic Lyne, a former senior diplomat, quoted the evidence of the ex-PM's Europe adviser, Stephen Wall, who said the Cabinet would not have appreciated before January 2003 that military action was likely.
Lyne said it appeared the Cabinet had not discussed Iraq between April 11 and September 23 2002, as the prospect of war drew ever closer.
He asked Mr Blair whether he felt he had the endorsement of the Cabinet for Britain's increasingly aggressive policy towards Saddam in this period.
"I honestly don't think you could have a Cabinet minister around that table who would say, 'oh my goodness, I didn't know we were saying Saddam had to comply with the U.N. inspectors or we were going to take military action'," Blair said.
"I mean, I was saying it. At every Prime Minister's Questions I was being asked it."
"Daily there were stories that we were planning and about to launch military action with the U.S.," he said.
"So the one thing nobody could have been in any doubt about was either where I stood on the issue or what the policy of the government was."
Blair was prime minister in the run-up to war, during the invasion and at the height of the conflict. He handed over power to Gordon Brown in 2007.
Brown and many other current and former British officials have appeared before the panel.
Blair was mostly positive during his first appearance, but admitted that there hadn't been proper planning for what happened after the fall of Saddam Hussein.
Planners did not foresee the huge destabilizing roles played by Iran and insurgents, or problems with Iraq's civil service, he said.
He insisted that the invasion was lawful, based on U.N. Security Council Resolution 1441. Many critics of the invasion said at the time that a further resolution would be needed to authorize war.
Blair admitted that it would have been "politically" preferable to have a second resolution. But he said Hussein was playing games with the West and more time would not have solved the problem.
He said Britain and America had slightly different reasons for going to war. The Americans, he said, wanted to remove Hussein from power.
The British, on the other hand, were primarily concerned with dealing with the Iraqi dictator's "WMD ambitions. If that means regime change, so be it," Blair said.
No weapons of mass destruction, or WMD, were found after the invasion.
The Iraq Inquiry, which started in 2009, is an independent panel led by longtime civil servant John Chilcot. Its goal is to establish what happened before and during the war and identify any lessons that can be learned from the conflict.
The inquiry is examining the period from the summer of 2001 through the present day. The military operation was launched in 2003.