Prime Minister Blair arrived in Baghdad's heavily protected Green Zone at midday.
His office said he was here to show his support for Iraqi Prime Minister Nouri al-Maliki's government and for the process of Iraqi reconciliation.
Mr. Blair is on a regional tour that has taken him to Turkey and Egypt, and will continue in Israel and the United Arab Emirates.
The two leaders met for about an hour at the Iraqi prime minister's office.
At a joint news conference, Mr. Maliki said they discussed ways to make the political process a success, including engaging regional countries.
Mr. Blair said they also discussed preparations by British military units in the southern city of Basra to transfer security responsibility to Iraqi forces next year.
Britain plans to withdraw several thousand troops in 2007, despite concerns that Iraqi forces are not ready for the responsibility. Mr. Blair defended his government's plan.
"It has been our strategy from the beginning, with Saddam removed, to have a political process that is democratic, to have our forces in support of that democratic process, but as the Iraqi capability grows, then to stand our forces down. So, this is not a change of our policy, this is our policy."
The United States is also working to bolster Iraqi security forces, its police, border guards and military.
The key to this effort are American military advisors who are training Iraqis, so they will be able to train their own forces. As the Iraqis become more capable, the idea is for the Americans to fall back more into a support role.
Right now, there are about five-thousand U.S. trainers in Iraq. The majority work in the field alongside Iraqi forces, a dangerous mission given that Iraqi forces are often the target of terrorist attacks. Brigadier General Dana Pittard, who commands about three-thousand of the field trainers, says his force will be expanded nearly three-fold by next summer.
"I do believe that 2007 will be the year of transition, and our transition teams will lead the way."
Unrelenting sectarian attacks and abductions highlight the urgent need for stronger Iraqi security forces. In the latest such violence, gunmen kidnapped about 25 male employees and visitors from the Iraqi Red Crescent offices in central Baghdad on Sunday.