A year since the death of John Smith, Labour has not just traded up from beer and sandwiches, its language and policies are changing too. In an economic speech which almost won over the Daily Mail leader columns, Mr Blair called for the strict control of inflation, which he described as an "essential prerequisite of sustainable economic growth". The objective of any government, the Labour leader added, "is to lower, rather than to increase, the tax burden on ordinary families".
At Westminster, Mr Blair's speech was enough to alarm Conservatives.
One ex-minister observed wearily: "Blair is taking all the public's worries about Labour one by one and picking them off. Next he'll be calling for a balanced budget and no borrowing."
It also provoked some grumbling on the Labour left. "You cannot," said one MP, "govern a country by having good soundbites and giving the right- leaning press what they want."
But are the two parties' policies really converging? Sensitive to the "Tory Blair" accusations, the Labour leader's allies point to many distinctive Labour policies including constitutional reform, trade union rights, a minimum wage, and a pro-European stance. Social justice, however that principle is defined, remains central.
Nevertheless, Mr Blair's speech, and that of his Shadow Chancellor, Gordon Brown, the week before, mark an important moment in Labour's quest for power. Both were designed to play down expectations of what can be achieved by a Labour government in the short term, while laying emphasis on the "long haul" to economic regeneration through education, training and other supply-side measures. Only once the economy is performing properly can a government intervene, the argument goes.
Mr Blair, due to visit Germany this week in his first big foreign trip, is in no mood to be defensive. As one friend put it: "Tony is in a position of huge strength and is currently exploiting it."
The Labour leader and his Shadow Chancellor have stamped on spending pledges, in a bid to prove to voters that the Opposition is no longer the party of "tax and spend". One front- bencher described having a 10- page pamphlet reduced to one paragraph by the Shadow Chancellor's office, as anything which might involve spending money was excised.
The byword is "realism" and the message to colleagues is: do not promise more than you can deliver. These efforts are designed to remove the public's traditional fear of Labour's management of the economy.
Similarly that other source of unpopularity - Labour's relationship with the trade unions - has been redefined. Union bosses who expected to dictate the detail of policy on the national minimum wage two weeks ago were given short shrift, and Mr Blair has made clear his keenness to reduce their block vote at party conference to 50 per cent.
In some other areas policy is moving to territory which has been vacated by the Conservatives. Robin Cook, Shadow Foreign Secretary, has sketched out a more positive agenda on Europe than the Tories, while remaining "Euro-realist".
On education the Opposition will try to take the issue of standards in schools away from the Tories, endorsing school tests; on health it will argue against money wasted on bureaucrats. Documents on the NHS internal market and grant-maintained schools, due shortly, will fall short of complete reversal of government reforms.
It may not be a Conservative agenda, but nor is it an old-style socialist one. Giles Radice, the Labour MP whose research helped convince Mr Blair to tackle Clause IV, describes Labour as having "a modernised social democratic position".
Not all have been won over and, according to one MP, "there are those in the party who fear a complete lack of principle and think that anything the media want, Tony will give them. They are very pessimistic but they're keeping quiet."
But with the imposed discipline of a looming election, relationships between left and right appear much better. Take, for example, the Tribunite Peter Hain, who two years ago was the scourge of Mr Brown's economic policy. Last week Mr Hain was happily sharing a beer with the Shadow Chancellor.
In fact the left is weak and leaderless and the once powerful Campaign group enjoys little influence. Outmanoeuvred by Mr Blair's success over Clause IV, it has been left impotent by the Labour leader's popularity and his good Commons performances. As one left-winger put it: "People have seen the error that the ultra-left made over Clause IV by putting themselves completely out of tune with the party membership." The expulsion of Militant has also removed one of the forces which polarised debate.
Meanwhile the most senior figures on the left are locked into position around the Shadow Cabinet table. John Prescott, the deputy, continues to enjoy a good relationship with the party leader, even if his rapport with Mr Brown is more strained.
Mr Cook, despite initial unhappiness over Clause IV and his move to the foreign portfolio, remains a central figure. He now has an enhanced role as chair of the National Policy Forum. And Margaret Beckett has been careful not to rock the boat. Further down the hierarchy, figures such as Clare Short are listened to by the leadership. While the left finds the Blair leadership style less congenial than that of Mr Smith, it has not been frozen out.
Mr Blair has been quick to spell out his philosophy and direction, but has so far "travelled light" on policy details, reducing the likelihood of internal conflict before the election.
The real question is what happens - particularly in the management of the economy - if he gets into government. Then the left could quickly become dissatisfied if there is no short-term cut in unemployment and spending in key areas is reigned in.
But the biggest weapon in Mr Blair's armoury is the desperation among Labour MPs to win power. One front-bencher confessed last week: "I just couldn't stand another five years in opposition. I've done it all before - I've put down my Early Day Motions, mounted my campaigns, answered my letters. I know there must be more to politics than this."Reuse content