In a lengthy session today giving evidence to the Leveson Inquiry into press ethics, a calm and measured Blair said that he would find it "pretty bizarre" if politicians did not have some kind of relationship with major media organisations.
Blair said that he and News Corporation boss Murdoch had a "working relationship" until he left Downing Street. After this time, the two men became much closer, and Blair agreed to become godfather to Murdoch's daughter, Grace.
Blair said that Murdoch "didn't lobby [him] on media stuff" while he was in office, but admitted that he was "aware of the positions" of his media company, particularly on Europe.
He insisted, though, that on regulatory issues affecting Murdoch's business, they "decided more often against than in favour".
"Am I saying he's not a powerful figure in the media? Well no, of course he is, and of course you're aware of what his views are, and that's why I say part of my job was to manage the situation so that you didn't get into a situation where you were shifting policy," he told the inquiry.
"I would say very strongly we managed the position that I believed in on Europe and that was a position The Sun and the News of the World frequently disagreed with me on."
Blair said that his government had introduced a number of initiatives that were opposed by Sky, the satellite TV broadcaster part owned by Murdoch's News Corp.
This included handing more power to media regulator Ofcom, thus placing "far greater scrutiny than ever before" on Sky, as well as preventing News Corp from buying ITV.
But discussing the importance of getting Murdoch's Sun "on board" with Labour rather than the Conservatives ahead of the 1997 election, Blair said that he had "no doubt" that Murdoch was the decision maker not Rebekah Brooks, the paper's then-editor.
Discussing his friendship with Brooks, Blair said that he had sent her a message of support after she resigned as chief executive of News International in mid-2011 after the phone hacking scandal broke.
"I'm somebody who doesn't believe in being a fair-weather friend and certainly I said I was very sorry for what happened to her," he said. "I don't know anything about the facts of the particular case but I have been or seen people go through these situations."
> Rupert Murdoch: I have never asked a prime minister for anything
Blair told the Royal Court of Justice inquiry that at its best, British journalism was the "best in the world". But he added that the relationship between politicians and the press had become "unhealthy".
Discussing the use of PR 'spin' during his time in power, Blair said: "It's almost impossible now, even now, to dispute this issue to do with so-called 'spin'.
"I can't believe we are the first and only government that has ever wanted to put the best possible gloss on what we're doing, that is a completely different thing to saying that you go out to say things that are deliberately untrue."
Blair said that it was "perfectly legitimate" for papers to comment on politicians, but he feels that some publications, particularly the Daily Mail, "took it too far and it turned into a personal vendetta".
He discussed how his family had faced intense pressure from the press, particularly his wife Cherie, which he called "unnecessary and wrong".
Cherie, a lawyer, had lodged 30 different legal challenges against press intrusion and treatment. She is also suing Murdoch's News International for alleged phone hacking.
Blair said that it was "wrong" that a section of the media say, "we are going to go after that person", because he feels that is "not journalism... it's an abuse of power".
He added: "The problem with these attacks is that you may get an apology, but in a sense, 'Who cares?' The story is out there."