Denial is the PRIMARY psychological symptom of addiction. It is an automatic and unconscious component of addictions.  Addicts are often the last to recognize their disease, pursuing their addictions into the gates of insanity, the collapse of health and ultimately death. Sadly, many addicts continue to act out on their addictions while their world collapses around them - blaming everything but the addiction for their problems. 

Denial is one of the reasons that recovery from addictions is seldom effective if the chemically dependent person is forced into treatment. You cannot work on a problem unless you accept that it exists. 

Step One of Alcoholics Anonymous deals with working through our denial, allowing us to accept our powerlessness over addictions and the chaos and unmanagability they bring into our lives.  (This is just one of the curious and beautiful things about recovery - in acknowledging powerlessness the addict is empowered to lead a healthy life.)  

Active alcoholism and addiction are characterized by a struggle to control use. Addicts resent the suggestion they are powerless until things get so bad they are forced to face their addiction. Sadly, some alcoholic / addicts never break through their denial, and continue use to the point of insanity and death.

There are many subtypes of denial, including projection, ("I don't have a problem - you have a problem.") rationalization, ("I drink because of my crummy job / life / wife /parents etc.") intellectualization, (being too much "in your head" about your problems) minimizing, (sure I drink a few beers each day, but it's not a problem") suppression, (forcing down memories of our using behavior and consequences of use) withdrawing, (leaving relationships, jobs, etc. rather than face our problems.) geographic escapes (my life is unmanagable - but it'll get better if I move to another place.)