Liz Kendall has warned that Labour must move away from interfering in people's lives if it is to win back power.
The leadership hopeful said the party had too often turned to regulation, restrictions and bans as a way of resolving the country's problems.
In a speech in which she appeared to attempt to distance Labour from its nanny state tag, the shadow health minister said people must be given the power to shape their own lives.
Ms Kendall again dismissed accusations she was pushing Tory values, insisting her plans were rooted in the ethos of the beginnings of the Labour movement.
And ahead of tonight's vote on Government welfare reforms, she backed acting leader Harriet Harman's approach, warning that voters believe Labour is the party of "spend, spend, spend".
In a speech in Brixton, London, Ms Kendall said: "We didn't trust the people of this country. Our answer to many of the problems we face as a country was to regulate, to restrict, to fix, or ban.
"Too often, we spoke as if the challenges facing Britain could be solved by Westminster politicians and Whitehall lawyers alone.
"We rarely talked about how we would help people to do things for themselves and for one another.
"Our politics must be of the people, for the people and by the people."
Ms Kendall said there was a need for "radical" devolution across England and the rest of the UK.
Local authorities would become "equal partners" with ministers in agreeing a settlement for devolved powers and responsibilities every Treasury budget cycle under her plans, she added.
Labour must also create an English division of the party similar to stand alongside the Scottish and Welsh groupings.
Ms Kendall said: "Unlike the Tories, Labour understands this requires support, resources, backing and opportunities – and for an active Government to work in new ways.
"My argument today is that we need to go back to our roots as a party and ensure people have the power to shape their lives, the services they use, and the communities in which they live. Power in people's hands. That is what Labour is for. Yesterday, today and always."
Ms Kendall said she wanted to put power in people's hands.
She said: "I think we became quite a centralised, statist party which lost touch with some of those earlier traditions which gave people power and control over their own lives."
She added: "Too many people think we don't believe in work, taking responsibility, taking care of yourself and your family, and that we too often do things to people or for them rather than through them."