The Tory leader warned his critics they would have to toe the new party line. But right-wingers claimed Mr Hague was "flailing around" in a desperate search for new policies to bolster his own position.
Mr Hague told BBC Radio: "I went to a comprehensive school myself. I use the National Health Service myself. I'm not going to have my party caricatured any longer as a party that wants to destroy these things."
In a stern message to the party's Thatcherite wing, he said: "Of course it ruffles a few feathers if you do that, but they'll just have to get unruffled, because that's the way I'm going to carry on."
But Mr Hague's hopes of drawing a line under the controversy suffered a setback when Michael Howard, the shadow foreign secretary, pointedly refused in a BBC television interview to endorse the new policy set out last week by Peter Lilley, the Tories' deputy leader.
Mr Howard criticised the party's break with its Thatcherite legacy at last week's Shadow Cabinet meeting. He joined forces with his arch-enemy Ann Widdecombe, the shadow health secretary, and Iain Duncan Smith, the social security spokesman, who are both pursuing radical ways to attract more private sector provision in their respective fields.
"What we have done is to accept all the Labour attacks on us over public services," one senior Tory frontbencher said yesterday. "But I don't think that will go us any good with the voters."
Some Shadow Cabinet ministers were irritated yesterday when Mr Lilley floated plans to privatise the Post Office and London Underground and to scrap the BBC licence fee without first consulting them. "I would have been nice to have been nice to know," one said.
Tonight the Tory leadership will risk another row with right-wingers when Francis Maude, the shadow chancellor, will come out in support of the Government's pounds 40bn injection into the NHS and education over the next three years. Mr Maude will tell a Tory dinner that the party had allowed people to believe it was not committed to public services.
"In Government we sometimes sounded as if we were only interested in markets and accountancy. But someone suffering from cancer is a patient who wants to be cared for, not a customer within the internal market."
The Shadow Chancellor sought to placate Mr Hague's critics by saying the Tories would seek to raise extra cash for public services through "common sense co-operation and partnership with the independent sector."
Labour seized on the latest U-turn. Alan Milburn, the Chief Secretary to the Treasury, accused the Tories of "chaos laced with hypocrisy" because they had repeatedly accused the Government of "reckless" spending and had voted against measures to raise pounds 6bn of revenue.
The Tories insisted that they would stick to Labour's three-year spending plans on health and education but would reduce the social security budget.
Tory officials insisted yesterday that Mr Hague's attempt to define a new brand of "caring Conservatism" was proving popular on the doorsteps in the campaign for the local authority elections in 10 days time.
But some Tory MPs are worried the party will be seen as irrelevant and divided, and say Mr Hague has suffered his "worst week" since becoming Tory leader. Edward Leigh, MP for Gainsborough, said: "I don't think we are going to win the next election or any election by trying to beat Tony Blair at his own game.
"I think he is too good at that game. There is a massive constituency of sound Conservative voters who are just crying out for a lead."
There were further signs of Tory tensions when it emerged that Michael Portillo, the former cabinet minister, has called for the frontiers of the state to be rolled back. He made the declaration during a private lunch at the Institute for Economic Affairs last week.
He called for education vouchers, extended private health insurance and an end to the NHS monopoly over health provision.
The Tory Elite Begs To Differ...
Peter Lilley: "The free market has only a limited role in improving public services including health, education and welfare"
William Hague: "It would be a great mistake to think that all Conservatives have to offer is solutions based on free markets"
Margaret Thatcher: Her aides described her as "livid" and "amazed" at the content of last week's speech by Mr Lilley, one of her former proteges
Michael Howard: Refused to endorse Mr Lilley's speech yesterday; friends say Tories were wrong to give credence to Labour's attacks
Ann Widdecombe: Plays down the row, but says Tories will "betray" the dispossessed unless they supplement NHS with "other monies"
Iain Duncan Smith: Quietly furious. Like Ms Widdecombe in health, he will press forward with plans for greater private provision in welfareReuse content