Anti-austerity policies are a vote loser and Labour's defeat at the general election was caused by a failure to persuade the public it could be trusted to tackle the deficit, an independent review has found.
The study, led by the party's former policy chief Jon Cruddas, found that "the Tories didn't win despite austerity, they won because of it" and warned that Labour could not ignore the views of the public.
The findings came as left-winger Jeremy Corbyn, who has seen a surge in support for his anti-austerity message, suffered an opinion poll setback with a survey showing rival Andy Burnham is the clear favourite among Labour voters.
The Opinium poll found that among Labour voters, rather than just party members, Mr Burnham was on 39%, 15 points clear of Mr Corbyn, with Yvette Cooper on 22% and Liz Kendall on 15%.
Some 70% thought Mr Burnham was likely to win a general election as leader, while just 51% thought it likely that Mr Corbyn would walk through the door of No 10 as prime minister.
In a blunt message to the party, Mr Cruddas said it would have to accept "hard truths" about the reason for its electoral defeat.
"On the basis of the data, the public appear to think anti-austerity is a vote loser – we cannot ignore that," he said.
"We can seek to change the views of the public, but it's best not to ignore them."
In an article on the LabourList website he said: "The Tories won because voters believed they will cut the deficit, even though a majority understand that the economic system is unfair.
"The Tories' message on the deficit was clear, Labour's was not. The Tories are trusted to manage the country's finances, Labour is not."
Polling of 3,000 people in England and Wales for the review found that 58% of voters agreed cutting the deficit was the "top priority", with just 16% disagreeing. But some 60% agreed the economy unfairly favours powerful interests and 43% said they would vote for a party that would redistribute wealth from the rich to the poor.
Labour's crushing defeat in Scotland to the anti-austerity message of the SNP "does not set a precedent for its leftward shift in England", Mr Cruddas added.
"The SNP's anti-austerity politics simply increased the risk that Labour represented to English voters," he said.
Mr Corbyn sought to regain the initiative in the campaign by promising a radical series of measures to improve the supply of housing, including rent controls and the possibility of extending right-to-buy powers to private tenants while restricting them for council house occupants.
His policy document said: "The free market free-for-all in housing has failed. Only the Government is able to play the strategic, co-ordinating role to tackle the housing crisis."
The plan floats the idea of a "right-to-buy shared equity scheme" for private tenants renting from large-scale landlords.
Mr Corbyn calls for at least 240,000 homes a year to be built, with more than half of them council houses.
He said "exorbitant" rents needed to come down and the document proposed strict limits on rent rises, possibly linking them to earnings rather than increases in property prices.
:: Opinium Research carried out an online survey of 1,942 British adults from July 24 to 27.