Mr Smith's speech, made in Bloomsbury Baptist church, London, marks an attempt by sections of the left and centre-left to create a new, post-Thatcherite agenda, underscored by Christian Socialism.
The Labour leader, who is a regular churchgoer, claimed that 'politics ought to be a moral activity', and argued that the individualism and self-interest which characterised the Thatcher years had been found wanting.
He told an invited audience of more than 600 guests, including shadow Cabinet ministers and union leaders, that Labour 'could replace cynicism with faith, despondency with expectation, despair with hope'.
Reflecting a consistent theme in his recent attacks on decliing standards in public life, Mr Smith said: 'We must never be afraid of saying that we will adopt a policy because it is, quite simply, the right thing to do. At a time when the moral values of our society are coming under increasing strain, we could be taking the first steps in a social revolution by encouraging, through conviction and example, a return to the standards of integrity and honour our society deserves.'
Labour's front bench includes several committed Christians, including Chris Smith, the environment spokesman - who joined his party leader yesterday - and Tony Blair, shadow Home Secretary.
John Major has made few references to religion although some of his Cabinet colleagues have compensated; John Gummer, the Minister for Agriculture is a member of the Synod of the Church of England, and John Patten, Secretary of State for Education, wrote a controversial article, laden with religious overtones, about good and evil.
The Labour leader's speech was drawn from an essay published in a book, Reclaiming the Ground, with a forward written by Mr Blair. Other contributors include Chris Smith, Paul Boateng, the front bench spokesman on the Lord Chancellor's Department, and Hilary Armstrong, the Labour leader's Parliamentary Private Secretary. Taken together the essays and yesterday's speech underline the extent to which Labour now feels able to challenge the Tories' on moral issues. While conceding that self-interest played an important role in any political party's appeal, Mr Smith mounted an assault on the Thatcherite contention that there is no such thing as society.
In a speech twice interrupted by applause the Labour leader said: 'Let us not deny the tide of opinion which I believe is beginning to flow towards a recognition of the value of society and away from the destructive individualism of so much of modern Conservatism.'
The free market doctrines of the radical right were 'based on an absurd caricature of human behaviour', Mr Smith said, adding that market systems are 'embedded in other social and political institutions which also contribute to human welfare.'
He added: 'It is surely a paradox that, despite their electoral achievement since 1979, the Conservatives have really achieved so little in reshaping public attitudes in their own laissez-faire self-image.'
Mr Smith argued that freedom should be defined not simply as 'a minimal state charged with defending negative liberty', it should also be about empowering individuals. 'That is why I believe the Labour Party must be bold in demonstrating our commitment to enhance and extend individual freedom by building a society which is dynamic and responsive to the aspirations of all our people', he said.Reuse content