While Mr Blair took his political campaign out into the country, getting away from the "froth and bubble" of the latest attack on his leadership, the Deputy Prime Minister exploited Labour's continuing rifts.
Mr Heseltine told the Independent: "Mr Blair would have to depend upon the support of a significant number of people on the left-wing of the party, and a price would have to be paid for their loyalty.
"Labour's blue touch-paper is still linked to the emotive arguments of yesterday; anti-profit, anti-capital, anti-enterprise. They would have a significant hold over him."
Mr Heseltine warned that the price of the Left would be "extracted" through tax increases, more public spending and concessions on trade union law.
But Mr Blair last night rejected yesterday's attack on him as a Kim Il Sung-style dictator by backbencher Austin Mitchell, saying he wanted to campaign on the issues like the economy, unemployment and skills and education, health and crime.
During a tour of North Wales and the North-west - part a "people's tour" campaign to sell directly the "New Life for Britain" manifesto to the country - Mr Blair said he wanted to connect with the real world of the voters.
He told BBC radio: "When you're the leader of a political party, if you're not going to fudge and compromise the whole time, you've got to set a clear direction and lead."
Mr Blair said later: "If the media wants to, it can find somebody in the party to criticise me every day between now and the election.
"The important point is whether those people speak for the party as a whole, whether they represent the centre of gravity, and the direction of the party - and they don't."
That was not the case with the Conservative rebels, like the Euro-sceptics, who represented the new direction of the Conservative party. "Their divisions are seismic," Mr Blair said, "...they are divisions of policy."
But Mr Heseltine drew his own distinction between Labour and Tory rebels.
He told BBC radio's Today programme: "Tony Blair's facade is cracking...imagine what it would be like if this crew were behind Tony Blair with his majority in Government."
Mr Heseltine told the Independent: "To achieve the support of these people, he would have to introduce more overtly left-wing policies than he is now prepared to admit."
Asked whether left-wing revolt might force Mr Blair, as Prime Minister, to seek the support of the Liberal Democrats, Mr Heseltine said: "The left-wing would not tolerate that. The party would split."
Earlier, still reeling under the latest broadside from within the party ranks the leadership went onto the offensive against Mr Mitchell. But nothing it could do matched the remarkable public recantation of Mr Mitchell himself.
Showing all the signs of a man who had spent some time in the hands of party "minders", he told the Today programme that he had been misinterpreted.
It was not true that Mr Blair was a dictator, he added for good measure.
"What I was saying was that Tony Blair is a winner and in touch with the mood of the country. People like Tony Blair, and he is going to lead us to victory."Reuse content