Tory MPs also privately said they were uneasy about the advertisements, which were attacked by Peter Mandelson, the head of Labour's election campaign, as some of the crudest negative campaigning ever seen in British politics.
The backlash against the advertisements may help Labour overcome the more serious damage caused by Clare Short's attack on the forces "in the dark" behind Mr Blair as Labour's old guard joined in her criticism. Ms Short's aides rejected reports that she would retire from politics over the row.
Mr Mandelson, believed to be a target for some of Ms Short's criticism of "spin doctors", warned that the campaign would backfire on the Tories.
"What little bit of good news they have had last week has gone to their heads and they have lost any sense of decency or judgement. It is vicious and nasty, and is final confirmation of the sort of negative campaign they are running.
"It will harden up attitudes of some of their own supporters, but the general public will be disgusted by it. I firmly believe it will backfire. We have seen two opinion polls showing that the New Labour New Danger campaign is pushing voters towards Labour. This advertisement will increase that trend."
Mr Mandelson said the Tory chairman had "overreached himself" with the "vicious and nasty" attack on Mr Blair aimed at exploiting Clare Short's outburst against his leadership.
He said Mr Major should disown the campaign ordered while he was on holiday from MC Saatchi, one of the Tories' advertising agencies.
"There has never been an advertisement of any sort of political communication like in Britain before now. Not even the Conservatives under Norman Tebbit would have dreamt of placing advertisements like this.
"It is something which the Prime Minister should condemn and take steps to stop as soon as he returns from holiday."
Labour Deputy Leader, John Prescott, said: "The Tory campaign of lies and vilification has now become utterly pathetic.
"A party that wastes millions of pounds from secret sources on this sort of rubbish has no right to govern this country."
Mr Prescott has privately warned Mr Blair that he faces trouble ahead, unless he slows down the pace of policy change. Labour traditionalists joined in the criticism yesterday. Roy Hattersley, the former deputy leader, said in the Observer: "The genie is out of the bottle. No matter how hard he tries, Peter Mandelson - whom Clare would have done better to name - cannot squeeze him back ... Labour needs to take this Grand Remonstrance seriously. Rightly or wrongly, Clare said what a lot of rank-and-file members are thinking."
Mr Hattersley, who is stepping down at the election, said Ms Short's greatest mistake was in denying there were policy differences with Mr Blair. "Clare, like me, believes people on higher incomes should pay more tax in order to finance improved services for the disadvantaged. Blair does not."
Peter Shore, a former shadow Chancellor, said it was no good "pretending" the party was no longer interested in tax and redistribution of wealth.
Mr Shore said Labour's spin doctors were "wrong" to try to bury the old Labour "tax and spend" image for fear of frightening voters.
Defence Secretary, Michael Portillo said: "Peter Shore's remark is another candid admission of the truth that we all know: that Labour stands for higher public spending and higher taxes.
"With each day that passes Labour's true agenda is laid increasingly bare, and the party is splitting into warring factions that no soundbite can hold together."Reuse content