Former British Prime Minister Tony Blair has resigned as envoy of the Middle East Quartet diplomatic group after eight years in the job.

"Tony Blair has tendered his resignation in a letter to (UN Secretary General) Ban Ki-moon," a spokeswoman for Blair told AFP on Wednesday.

Sources close to Blair said he would step down officially next month.

Israel's Prime Minister Benjamin Netanyahu thanked him for "great efforts to advance stability and peace in the region".

A statement from the Quartet, which represents the United Nations, United States, European Union and Russia, thanked Blair for his service and said it would continue to work for peace between Israelis and Palestinians.

"Mr Blair demonstrated an unwavering commitment to the cause of Israeli-Palestinian peace and made lasting contributions to the effort to promote economic growth and improve daily life in the West Bank and Gaza," the statement read.

However, British group Stop the War Coalition, which led mass protests against the Iraq War while Blair was in power in Britain, welcomed the resignation and said Blair should never have held the position.

"Tony Blair's legacy remains; a devastated and war-torn Iraq, a Middle East in turmoil, and a much more dangerous world," the group's national convenor Lindsey German said.

"We will continue to campaign against the aggressive foreign policy he championed and for him to answer charges of war crimes."

Blair has long defended the decision to invade Iraq in 2003 against accusations that the threat posed by its then dictator Saddam Hussein was exaggerated.

Blair was appointed to the unpaid Quartet position in 2007 to support the Palestinian economy and institutions in preparation for eventual statehood.

Writing on his website in February after visiting the Gaza Strip still ravaged by the 50-day war last year with Israel, Blair said: "The present state of Gaza is a rebuke: to those of us in the international community who over the years have made so many promises unfulfilled; to those who have offered leadership and failed to provide it."

Reports emerged in March that he was set to leave due to unease in Washington and Europe over his poor relations with the Palestinian Authority, although those claims were dismissed as "incorrect" by State Department spokeswoman Jen Psaki.

A source close to the former prime minister said he would continue to work with "the US, the EU and others, without any formal role" to support efforts to bring about a two-state solution.

"He will therefore remain active on the issues and in the region," the source said.