Sir Richard took on his role in August
General Sir Richard Dannatt is quoted in the Daily Mail saying British troops "exacerbated" Iraq's security problems and should withdraw "sometime soon".
The general later told BBC Radio 4 he meant that troops should leave "when the mission is substantially done".
Mr Blair said Sir Richard was saying "the same as we all are", but had been taken out of context in the newspaper.
In the Daily Mail interview, Sir Richard, who took on his role in August, said British troops should "get ourselves out sometime soon because our presence exacerbates the security problems".
And he said planning for what happened after the initial military offensive was "poor, probably based more on optimism than sound planning".
He later told BBC Radio 4's Today programme that when he talked about pulling out of Iraq "sometime soon", he meant "when the mission is substantially done, we should leave".
And he said the view that the presence of UK troops exacerbates the problems was "not right across the country", but in parts of it.
His intention was to "speak up for what is right for the Army" because that was his job, he said.
BBC security correspondent Frank Gardner said Sir Richard's remarks were little different from what other officers had been saying in private.
But the comments had given added urgency to finding an early and effective exit strategy, our correspondent said.
The prime minister said two provinces had already been handed back to the Iraqis "precisely because the job has been done there".
Mr Blair said he suspected Sir Richard had given a long interview to the Daily Mail and had then been taken out of context.
But he added: "I've read his transcript of his interview on the radio this morning, and I agree with every word of it."
Mr Blair said the general had set "in proper context" what he was saying during the Today programme interview.
"What he is saying about wanting the British forces out of Iraq is precisely the same as we're all saying. Our strategy is to withdraw from Iraq when the job is done."
Mr Blair said when Sir Richard talked about the troops' presence exacerbating problems in Iraq, he thought he was "absolutely right".
"I've said the same myself, in circumstances where the Iraqis are ready to take over control of areas and we're still there."
In places like Basra, the presence of British troops was still "absolutely necessary", he said.
Mr Blair told the press conference he had received a "report" about the Daily Mail article on Thursday night, and Sir Richard was "plainly not" saying that troops should be withdrawn from Iraq immediately.
A spokesman for Iraqi President Jalal Talabani said the departure of multi-national troops now "would be a disaster".
Iraq's ambassador to Britain, Dr Salah al-Shaikhly, said British soldiers were close to completing their mission.
"You've done marvellous in terms of the development, you've done marvellously in terms of keeping the security," he said.
White House spokesman Tony Snow said the United States had sought clarification on Sir Richard's comments.
"What he said is that the comment was taken out of context and his general point was that you know when your work is done you hand over authority to the Iraqis."
In Basra, Maj Gen Ali Hammadi, the Iraqi security co-ordinator, has told BBC's Newsnight that if the British stopped arrest operations in the city, the level of violence there would drop by 80%.