UN chief tells of Iraq war sorrow
Mr Annan, who leaves office after 10 years on 31 December, said life for the average Iraqi was now worse than under the regime of Saddam Hussein.
Expressing his sadness for being unable to prevent the war, he urged regional and international powers to help Iraq.
But Mr Annan urged his successor, South Korean Ban Ki-moon, to "do it his way".
Asked by the BBC's Lyse Doucet whether the situation in Iraq could now be classified as a civil war, Mr Annan pointed to the level of "killing and bitterness" and the way forces in Iraq are now ranged against each other.
"A few years ago, when we had the strife in Lebanon and other places, we called that a civil war. This is much worse.
"We have a very worrisome situation in the broader Middle East," Mr Annan said, linking the ongoing conflicts in Iraq and Lebanon with the Israeli-Palestinian conflict and tensions over Iran.