The Labour leader, in a speech in New York, staked Labour's claim to the centre ground but said he was ready to move to the right if necessary. Promising "radical solutions", Mr Blair said: "If at times they cross left-right boundaries, so be it. And so what."
He added: "I am a radical. I believe the centre can be fertile ground for radical politics. The extremes whether of left or right simply will not meet the real challenge. A modern party to be successful . . . must be in the centre, speaking for the mainstream majority."
His defiance of Labour's traditional left wing will please his supporters, but could provoke rebellion from the left who believe he has gone too far to woo Conservative voters. Rejecting the criticism of his left wing, Mr Blair said it was often "fatuously" claimed that to change the party was to sacrifice principle or betray history. "
He told the Anglo-American Chamber of Commerce: "We need a new radical centre in modern politics that can answer the competitive challenge whilst enhancing social stability and cohesion. And today's Labour party, New Labour, is a party of the centre as well as the centre-left."
Last night "One Nation" Tory MPs warned him off their ground. "He is prepared to do anything for power," said Tim Rathbone, the MP for Lewes.
Blair's speech was billed as an attempt to reassure international investors that Britain under a Labour Government would be a safe bet. But his key message to the sceptical Tory voters was that a government under his leadership would not impose punitive rates of tax.
He said police, school teachers and middle managers were hardly rich, but they all paid tax at the top rate of 40p in the pound. That may have implied that those on modest incomes would not face higher taxes under Labour, but Mr Blair refused to give any figures.
Labour "spin doctors" were anxious to deny reports from journalists on his plane to New York that he had privately said that he would not increase taxes for anyone earning less than pounds 40,000. Mr Blair stressed that no figures would be given by Gordo n Brown, the Shadow Chancellor, until the election. On Wednesday Mr Brown refused to be drawn on whether Labour would introduce a top rate of tax at earnings of pounds 60,000. Mr Blair said Labour's priority in Government should be to lower taxes at the bottom end and reduce the high marginal tax rates of millions of working people. "This should not be seen as a desire to punish those at the top," he said. John Major derided Mr Blair's attempt to bury his party's tax and spend image, warning on a constituency visit to Cambridgeshire to that Labour and higher taxes went together "like strawberries and cream". Alan Simpson, secretary of the left-wing Campaign Group of Labour MPs, stressed the need to restore a higher tax band for top earners to pay for improved public services. "Utopia is not a land with no taxation," he said.