Blair took office months before the princess died in a car crash in a Paris, France tunnel in 1997 and admits it was one of the first major tragedies he had to face as Prime Minister.
But, in an interview with newswoman Christiane Amanpour on Good Morning America on Thursday (02Sep10), the politician revealed he was worried something terrible would happen.
He said, "I was worried because it (her relationship with Fayed) was obviously going to be extremely difficult. And I wanted her to know what the implications and consequences of all of it was going to be."
Blair admits that, like most of Britain, he struggled to come to terms with the tragedy, adding, "Partly because of the loss, but partly because of the circumstances in which she died, there was also a sense of anger.
"Some of that anger was directed at the paparazzi, but some of it, I think, was directed at the establishment that people felt had let her down in some way."