The House of Commons Foreign Relations Committee is likely to hold its inquiry in public. The committee members hope to take evidence in June from witnesses, possibly including Blair, and publish a report in July.
The inquiry will consider whether the Foreign Office, "within the government as a whole, presented accurate and complete information to Parliament in the period leading up to military action in Iraq, particularly in relation to Iraq's weapons of mass destruction," the committee announced.
Controversy has focused on a government dossier, published in September, outlining evidence that Iraq had weapons of mass destruction and plans to deploy them on 45 minutes' notice.
The existence of such weapons was Blair's crucial argument for joining the United States in military action, and pressure on him has grown as occupying British and U.S. forces in Iraq have failed to locate chemical, biological or nuclear arms.
Blair's office has resisted the idea of a broad independent inquiry and suggested it would favor an inquiry by the Parliamentary Intelligence and Security Committee. But that committee reports to the prime minister, not to Parliament, and some lawmakers had pressed for a more open inquiry.
"Given its remit, I would not be surprised if the ISC did not already have this matter in hand," Blair's official spokesman had said earlier, briefing journalists on condition of anonymity. "We do not see the need for an independent inquiry of the nature that people are demanding."
Both parliamentary inquiries would fall short of the full independent inquiry some are seeking. But although the Foreign Affairs Committee is dominated by Blair's Labor Party, it has shown independence in past reports critical of the government.
No witness list has yet been drawn up, but Donald Anderson, chairman of the Foreign Affairs Committee, said the committee may invite Blair, Foreign Secretary Jack Straw and serving intelligence officers to give evidence.
"All options are open. We would aim to get as wide a range of witnesses as possible," he said. "The obvious concern we would be addressing is the quality of intelligence material and the use of that material."
The committee may be ready to take evidence behind closed doors if national security was at stake, he said.
Anderson said he hoped the committee's investigation would satisfy those legislators who have been calling for a probe, possibly in the form of a judicial inquiry.
More than 50 Labor lawmakers have signed a Commons motion drafted by Peter Kilfoyle, a former Labor defense minister, calling on the government to publish the evidence behind the dossier.
The Liberal Democrats, the third-largest party in Parliament, have called for a public inquiry. The main opposition Conservative Party has not endorsed an inquiry, but has urged Blair to publish any additional evidence to support the claims made before the war.
"Here is probably the biggest issue for almost a generation where Parliament must be seen to be asserting itself," Liberal Democrat leader Charles Kennedy told the BBC.
Kennedy, who had opposed British involvement in the war, said he believed the government's methods of presenting its case may have misled some people.
"I suspect that in presentational terms No. 10 (Blair's office) has gone for the most arresting presentation of the facts but that may in itself have had the very, very unfortunate effect of misleading certain people ..."
John Denham, who resigned as a minister at the Home Office because of the war, suggested a wide-ranging inquiry similar to one conducted following the Falklands war in 1982. He said it should examine issues of "intelligence, weapons of mass destruction and the diplomatic moves and failures that led to war itself."
Kenneth Clarke, a senior Conservative lawmaker who opposed military action in Iraq, said Parliament should debate the issues, which he saw as broader than the use or misuse of intelligence.
"The big issue is when did we decide to go to war?" Clarke told the BBC. "Did we support the Americans on the basis that they were going in for regime change ... ? And was Parliament given a genuine reason when we were all told about the imminent threat from these weapons of mass destruction?"