The other night I was down to 1 life left and stuck in a poison cloud, but I had a blet of regeneration.  My question is which happens first the regeneration of the poison cloud damage?

This was an important issue, because if I regenerated 2 life back first, then it basically negated the clouds damage, but if the cloud damaged me first before the regeneration then I was dead.

We ruled that whomever had the initiative got to choose the order, but that unfortunately lead to my death.  Since my opponent chose the cloud's damage first.