Tony Blair has called for a "new partnership" with Iran and Syria to help bring stability in Iraq and peace in the wider Middle East.
The prime minister said problems between the Israelis and Palestinians, in Lebanon and in Iraq could only be resolved if these two countries stopped interfering, and the benefits to them would be a return from isolation.
Mr Blair denied he was backtracking on UK and US policy, saying it would be a "fundamental misunderstanding that this is about changing policy on Syria and Iran" - countries which US president George Bush said were part of an "axis of evil".
But he stressed: "A major part of the answer to Iraq lies not in Iraq itself but outside it, in the whole of the region where the same forces are at work, where the roots of this global terrorism are to be found, where the extremism flourishes, with a propaganda that may be, indeed is, totally false, but is, nonetheless, attractive to much of the Arab street."
Mr Blair's speech to the Guildhall in London came after four British soldiers were killed in a bomb attack in Iraq on Sunday. The deaths come as Washington and London appear to be shifting their policy in the troubled democracy.
He will today talk via videoconference to the Iraq Study Group, an independent assessment into the current US strategy in Iraq led by former secretary of state James Baker and including a number of senior American politicians.
Downing Street said it made sense for the prime minister to contribute because of the UK's involvement in Iraq, but his involvement has raised questions among British politicians concerned about the government's refusal to allow a UK investigation into the conflict.
"It is galling that the prime minister will outline his ideas regarding a strategy change to the Baker commission, when the government has refused parliament the same opportunity," said Liberal Democrat leader Menzies Campbell.
"We need a fresh strategy based on British priorities, not one that relies on the outcome of an American inquiry."
Mr Blair stressed last night there would be no let up in international efforts to stop Iran's nuclear ambitions, and he continued to blame both Tehran and Syria for backing Hamas in the Palestinian territories, Hizbullah in Lebanon and Shia groups in Iraq.
They "put obstacles in the path to peace, paint us.as aggressors, inflame the Arab street and create political turmoil in our democratic politics," the prime minister said.
But for the first time he ruled out any military action to back up the threat of sanctions and stressed that the way was open for Iran and Syria to "relieve these pressure points one by one and then, from a position of strength to talk".
Iran had a clear choice, he said: "They help the Middle East peace process not hinder it; they stop supporting terrorism in Lebanon or Iraq; and they abide by, not flout, their international obligations.
"In that case, a new partnership is possible. Or alternatively they face the consequences of not doing so - isolation."