He said the record of the heated conversation between Andrew Mitchell and police at the gates of Downing Street was "clearly leaked".
The peer also accused the Police Federation, which demanded Mr Mitchell's resignation over the affair - in which the Government chief whip was said to have called officers "plebs" - of behaving in an undignified way.
Mr Mitchell finally quit a month after the initial confrontation but maintained he did not use the term.
The contemporaneous police note of the incident, published in newspapers shortly afterwards, said that he did use it, as well as a flurry of expletives.
Simon Reed, vice-chairman of the Police Federation, which represents rank-and-file officers, said how the information was made public was still unclear.
He told BBC Radio 4's Today programme: "If it was leaked it was unacceptable but I think you are making an assumption that a police officer or someone from the police leaked it.
"We don't know that. I understand that there is an investigation to determine that."
But Lord Blair said he disagreed with Mr Reed.
He told Today: "I think that this was clearly leaked. It is a police transcript. I think the Federation got this really wrong.
"I am not accusing the Federation of leaking it - but they went on too long about Mitchell. Mitchell was in enough trouble anyway and the Federation should have been more dignified."
Lord Blair said that, as he had told Lord Leveson, who has been conducting an inquiry into press standards, "leaking of material out of the police service became endemic… and that's got to stop".
Mr Reed said it was time to "draw a line" under the affair.
"We've moved on, the minister's moved on," he said.
