Mr Blair told the BBC there should be an "honest debate" about the issue with each side setting out their views.
But he declined to talk about his own relationship with News International.
As Labour leader he courted the Murdoch press but attacked the media in general shortly before leaving power.
Mr Blair welcomed the public inquiry into press standards, regulation and Westminster's dealings with the media to be launched in the wake of the phone hacking scandal at the News of the World.
'Free and vigorous'He insisted the media must remain "free, independent, vigorous and investigative" and be allowed to pursue stories in a "proper way".
But he said it was time for a "open and frank" rethink of their relationship with politicians in light of recent events and technological changes which had revolutionised news gathering and reporting and the way people consumed information.
"I think the sensible thing is get it all out and let's have a honest debate about it.
Continue reading the main storyI think most of us who have been at the top in public life over the last few decades have been uncomfortable with this relationship and the way it works”End Quote Tony Blair "I have wanted this for a long time. I think most of us who have been at the top in public life over the last few decades have been uncomfortable with this relationship and the way it works."
While both sides had their own needs, Mr Blair said politicians still remained dependent on the media for speaking to the public and communicating policy.
"The sensible thing now is to have an investigation which we put everything out there and the politicians explain their problems when they are dealing with incredibly powerful media people."
In opposition and then as prime minister, Mr Blair was often accused by critics of getting too close to News International - the owner of The Sun and The Times which supported Labour through his decade in No 10.
'Feral beast'In his autobiography, he said he grew to admire Rupert Murdoch - boss of parent firm News Corp - despite the media mogul's right-wing views, describing him as an "outsider" who had "balls".
Shortly before stepping down from office in 2007, Mr Blair took the press to task for what he said was their cut-throat competition and obsession with 24-hour news cycles and personality politics.
He compared the industry to a "feral beast", saying it "tore people and reputations to bits" and threatened politicians' "capacity to take the right decisions for the country".
But despite singling out specific titles for criticism, he did not highlight any Murdoch publications.
"I did not get much support at the time (for the speech)," he said. "But this is a major issue."
Mr Blair, who did not own a mobile phone while he was prime minister, has described the recent revelations about hacking as sickening.
His successor as prime minister, Gordon Brown, launched a scathing attack on News International on Wednesday, accusing it of "illegal activity on an industrial scale".
He also sought to distance himself from the company, claiming he did not have a "cosy or comfortable" relationship with its newspapers despite his own efforts to cultivate them.
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