Blair strategists study the Iron Lady's handling of her own seven-year crisis

It is the Government's lowest point since the Prime Minister came to power seven years ago; it seems to have lost its way and run out of steam. Although the premier's appetite for power is undiminished, the MPs are restless and the commentators are speculating on the runners and riders for the succession.

It sounds remarkably like Tony Blair's current predicament. But it happened in 1986, seven years into Margaret Thatcher's reign. Her response was to launch a fightback which is now the subject of study, fascination and admiration by Mr Blair's aides as they plot a similar comeback by their man.

The key to Baroness Thatcher's recovery was a series of new policies launched at the Conservative Party conference in October 1986 under the banner: "The Next Moves Forward." A succession of ministers announced several new ideas for the general election manifesto, largely about reforming public services, and gave the impression that the unpopular Mrs Thatcher was not a "one-woman band".

The event, choreographed by Saatchi & Saatchi, the Tories' advertising agency, is regarded as the most successful party conference in recent times. Labour's lead in the opinion polls was turned around by December. In the following June, Lady Thatcher won her third election victory with an overall majority of 101.

Mr Blair's aides pored over the television coverage of the Tories' 1986 conference before Labour's annual gathering in 2000. But the parallels with Mr Blair's current predicament are even more relevant.

It is no surprise that the Labour conference in Brighton this October will be the showcase for the party's election manifesto. Until then, the task is to produce eye-catching but workable policies for a third term. Some clues will be provided in five-year plans for health, education, transport and the Home Office, which are due to be published in June. But the conference will be the main focus.

One Blair adviser said: "There are lessons we can learn from Thatcher in 1986. We face a similar challenge. She had the Westland crisis, we have Iraq. The task is to hold your nerve and renew while you are in office by setting the political agenda again."

Another aide added: "The message from 1986 is that you have to look forward, not back. You can't just rest on your laurels and fight on your record. People gave us the benefit of the doubt in 2001, but will be less inclined to do that next time."

There are other parallels. Mr Blair, of course, wants to emulate Lady Thatcher by completing a hat-trick of election victories. His camp is haunted by the fear that, despite two landslide victories, he will fail to transform the political landscape in the way Baroness Thatcher did.

"If it ended now, what would he be remembered for?" is a question debated in Labour circles. The short answer is: the Iraq war and his unswerving support for a United States president (another thing he has in common with Lady Thatcher).

There have been changes, such as devolution for Scotland and Wales, a national minimum wage and tax credits that the Tories would not reverse. But Mr Blair's mission to turn around public services and resolve Britain's ambivalent relationship with Europe remains unaccomplished. That is why he wants another few years in the job.

Some advisers argue that the parallels with 1986 can be overdone. They do not want Mr Blair to be seen to be copying the Thatcher handbook, especially at a time when Labour is portraying Michael Howard, the Tory leader, as the "son of Thatcher" in its campaign for the 10 June local and European elections. One Labour strategist said: "His presence shows that he has missed his opportunity to modernise the Tories. With Michael Howard as leader, they are still stuck in their failed Thatcherite past."

The Labour Party regards the "Thatcherite" label as a good line of attack, confident voters have moved on. But when it has suited him, Mr Blair has been happy to praise Lady Thatcher. She was "a radical, not a Tory," he told a conference of the media magnate Rupert Murdoch's executives in 1995. "It isn't that Thatcherism was all wrong. It wasn't," Mr Blair said in 1999.

Liam Fox, the Tories' co-chairman, criticised Mr Blair for not congratulating Lady Thatcher yesterday on the 25th anniversary of her first election victory: "Perhaps at this time with his own leadership under question, the memory of 1979, when a rejuvenated Conservative Party trounced a discredited Labour government that had let people down, is a bit too near the knuckle."

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