Former prime minister Tony Blair has attacked the record in office of his successor Gordon Brown and warned Labour it needs to avoid any return to its traditional left-wing comfort zone if it is to have a chance of electoral success.
Mr Blair said Labour needed to renew its links with business if it wanted to appear credible on economic issues.
He stressed his support for Labour leader Ed Miliband, but warned that the party could not indulge in the "politics of protest".
Addressing members of the Progress campaign group Mr Blair tore into Mr Brown's time in office, claiming "we lost the driving rhythm that made us successful".
He said: "I remain unremittingly an advocate of third way, centre ground, progressive politics that came to be called New Labour.
"From 1997 we were New labour. In June 2007, frankly we stopped.
"We didn't become Old Labour exactly but we lost the driving rhythm that made us different and successful.
"It was not a government of continuity, I'm afraid, from 1997 to 2010 pursuing the same politics. It was 10 plus three (years)."
Mr Blair highlighted a "pro-enterprise and business policy that took away from the Tories the mantle of the party of business" as one of the reasons for his electoral success.
"Job creation is a progressive project and you don't create jobs by attacking the businesses that create them," he said.
In a warning to Mr Miliband not to take the party to the left he said: "Progressives win when they have the courage to be the change-makers. They lose when the public senses that to please themselves, they retreat to where they feel calm, comfortable and small c conservative, echoing the politics of protest but shunning the hard decisions of Government."
He added: "Parties of the left have a genetic tendency, deep in their DNA, to cling to an analysis that they lose because the leadership is insufficiently committed to being left ... there's always a slightly curious problem with this since usually we have lost to a party of the right."
Pointedly he said: "This strategy never works."
On the economy, Mr Blair said: "There is a risk that the public sees us, when we oppose deficit cuts, as simply wanting more spending for the sake of it, which isn't the case."
He praised shadow chancellor Ed Balls for attempting to make the argument that cutting the deficit too quickly could stifle growth.
But he added: "I still think we need to focus a lot on the micro side about targeted policies that support business, that create jobs that allow that large amount of accumulated reserves in business to be invested.
"That also gives us an opportunity to regain, which I think is very important for us, our relationship with business."
He said that when the Tories produced a host of senior business figures to back them at the election, Labour was unable to respond.
"If you are fighting an election, as we were on the basis 'we are the people best able to manage the economy and look after it', my instinct is ... it's really hard to do that unless you have a section of business that's prepared to come out and support you."
Mr Blair also reiterated his support for the UK's membership of the euro, despite the economic crisis gripping the single currency zone.
He said: "I think the politics have always been absolutely clear in favour of being central players in Europe.
"I believe the euro will survive. I think there are going to have to be some fundamental changes in order for it to do so, but nonetheless I believe it will and I think that Britain, at a certain point in its future, should the economics be right, should be in it."