Tony Blair has warned Labour that its fierce resistance to austerity and welfare cuts risked reducing it to a party of protest.
In an apparent dig at Ed Miliband, the former prime minister cautioned that the political centre ground in Britain had not shifted to the Left in the wake of the credit crunch.
He highlighted the danger of returning to the dividing lines of the 1980s, when Labour championed the "status quo" and languished in opposition to Margaret Thatcher's Tories.
The intervention - Mr Blair's most significant on the domestic stage since leaving office nearly six years ago - came in an article for the New Statesman magazine.
He flatly rejected the argument that New Labour "created" the financial crisis, insisting the structural deficit had been below 1% in 2007-8.
But however the crisis occurred, he said, "no-one can get permission to govern unless they deal with its reality".
"The paradox of the financial crisis is that, despite being widely held to have been caused by under-regulated markets, it has not brought a decisive shift to the left," he wrote.
"But what might happen is that the left believes such a shift has occurred and behaves accordingly.
"The risk, which is highly visible here in Britain, is that the country returns to a familiar left/right battle.
"The familiarity is because such a contest dominated the 20th century. The risk is because in the 21st century such a contest debilitates rather than advances the nation.
"This is at present crystallising around debates over austerity, welfare, immigration and Europe.
"Suddenly, parts of the political landscape that had been cast in shadow for some years, at least under New Labour and the first years of coalition government, are illuminated in sharp relief.
"The Conservative Party is back clothing itself in the mantle of fiscal responsibility, buttressed by moves against 'benefit scroungers', immigrants squeezing out British workers and - of course - Labour profligacy.
"The Labour Party is back as the party opposing 'Tory cuts', highlighting the cruel consequences of the Conservative policies on welfare and representing the disadvantaged and vulnerable (the Lib Dems are in a bit of a fix, frankly)."
Mr Blair said the scenario was "less menacing than it seems" for the Tories. "They are now going to inspire loathing on the left. But they're used to that," he said.
"They're back on the old territory of harsh reality, tough decisions, piercing the supposed veil of idealistic fantasy that prevents the left from governing sensibly...
"For Labour, the opposite is true. This scenario is more menacing than it seems.
"The ease with which it can settle back into its old territory of defending the status quo, allying itself, even anchoring itself, to the interests that will passionately and often justly oppose what the government is doing, is so apparently rewarding, that the exercise of political will lies not in going there, but in resisting the temptation to go there."
Mr Blair insisted Labour's "guiding principle" should be to seek answers, not become the "repository for people's anger".
The party needed to be "dispassionate even when the issues arouse great passion" otherwise it would become a "simple fellow-traveller in sympathy" rather than a leader.
"In these times, above all, people want leadership," he added.
Mr Blair said "the case for fundamental reform of the postwar state is clear", and urged the Labour leadership to ask itself questions such as: "What is driving the rise in housing benefit spending, and if it is the absence of housing, how do we build more?"
He also suggested there should be more focus on increasing the skills of unemployed people, setting the right balance between universal and means-tested help for pensioners, and use of DNA technology to tackle crime.
In a passage likely to be taken as implicit criticism of Mr Miliband's policy platform so far, Mr Blair said the public wanted to "know where we're coming from because that is a clue as to where we would go, if elected".
Producing a "vision of the future" is "of the absolute essence", Mr Blair insisted.
"The issue isn't, and hasn't been for at least 50 years, whether we believe in social justice," he wrote.
"The issue is how progressive politics fulfils that mission as times, conditions and objective realities change around us.
Having such a modern vision elevates the debate. It helps avoid the danger of tactical victories that lead to strategic defeats.
"It means, for example, that we don't tack right on immigration and Europe, and tack left on tax and spending. It keeps us out of our comfort zone but on a centre ground that is ultimately both more satisfying and more productive for party and country."
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