Mr Adams strongly urged Mr Blair to refocus his attention on the peace process to prevent it being plunged into further crisis.
The talks, which were due to take place at Lancaster House in London next week, were aimed at finding a way to break the political stalemate.
Mr Adams, who met Mr Blair at Downing Street, said a period of intense discussion between the political parties was now vital to restore the process.
“We told him (Mr Blair) that the cancellation of the talks next week is a mistake and we argued for, and in our view there is going to be, a period of intense contact between us on all of these matters.”
The Sinn Féin chief voiced his party’s anger over the Government’s plans to impose financial sanctions because of the terror activities of the IRA.
The IMC report published earlier this week stated the IRA’s terror machine remained active and added that key Sinn Féin members were at the heart of its leadership.
The Sinn Féin president reiterated his party’s opposition to the report. “We told Mr Blair that we totally and absolutely reject [the report] and that we resent the effort by the two governments to penalise and discriminate against our party.”
Mr Blair issued a tough public message to Sinn Féin at his monthly Downing Street press conference on Thursday when he said any party which wanted to be part of the government of Northern Ireland “has to be clean of any association with paramilitary activity of whatever sort”.
On the IMC, Mr Adams complained about “the mentality which thought up this concept and that in some way believes that you punish the electorate of the largest nationalist party in the north, and in some way think that that can be a persuader or an engine for progress”.
“Those who think that imposing penalties or sanctions is any help in the process are either just totally and absolutely thick, don’t care, have learnt nothing of how this process was put together, are not watching what is happening in the Middle East or other conflict situations.”
Mr Adams said his party would send representatives to the forthcoming review of the Good Friday Agreement.