Blair is the first British leader to visit Indonesia in more than two decades since Margaret Thatcher in 1985. He is due to arrive in Jakarta from New Zealand on Wednesday evening.
"We see Britain as an invader," said Muhammad Rahmat, one of the protesters from the Hizbut Tahrir group, referring to the British government's involvement in Iraq.
One protester wore a rubber mask resembling Blair's face and a sign around his neck saying: "I killed 120,000 Iraqi people."
Relations between Britain and Indonesia have been generally cordial, and there has been greater anti-terror cooperation between them despite Jakarta's quite vocal opposition to Britain's involvement in the war on Iraq.
Blair's visit is expected to boost bilateral cooperation as Western nations seek to build ties with moderate Muslims.
In a bid to court Muslims in Indonesia, Blair is expected to meet leading Islamic scholars and visit a Muslim boarding school during his two-day trip.
After two hours, the protesters left the embassy which lies opposite Jakarta's main roundabout and staged another rally outside the Australian embassy to condemn Canberra's decision last week to grant temporary visas to 42 Papuans.
The 42 West Papuans landed on Australia's northern Cape York in a traditional dugout boat in January.
Australia's Immigration Department said last week that they had a well-founded fear of persecution and issued them temporary protection visas.