Blair's message from Florida urges Brown to back New Labour ideas

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Tony Blair declared that Labour was facing its "most difficult time" in government as he used his final new year message as Prime Minister to warn his successors never to turn away from his New Labour philosophy.

The Prime Minister also tried to seal his legacy, insisting that New Labour had produced "the new settlement in British politics" that all opposition parties had to follow.

In a veiled warning to Gordon Brown, who is expected to take over the premiership, the Prime Minister said: "This is the most difficult time for any government. Nine years into power, mid-term in a third term, Labour has never been in this position before. But the Labour Party should take heart. It is dominating the battle of ideas. It will continue to do so provided it continues to be New Labour.

"This isn't just about policy, though it is certainly about taking the tough decisions that prepare Britain for the future. It is also about our instincts, our ability to keep the core coalition together: those who need our help to get on the first rungs of the ladder of opportunity; and those who are already there but aspire to do better still."

The statement, issued while Mr Blair enjoyed his Christmas break at the Florida home of the Bee Gee singer Robin Gibb, devoted only a single paragraph to Iraq and Afghanistan.

Instead it committed the Prime Minister to using his remaining months in office to strive for the restoration of power-sharing in Northern Ireland and "work tirelessly" towards restarting the Middle East peace process.

Mr Blair did not mention the Conservatives, but in a pointed reference to the Tory leader David Cameron, he insisted that Labour "is dominating the battle of ideas" in Britain.

He said the "progress is obvious" in tackling issues such as education, health, crime and the economy.

He said: "New Labour set a new political course for our nation. Others now have to develop variations on our basic theme. In 1997 New Labour vowed to prove that economic prosperity and social justice were goals which were complementary, not in conflict. I believe, in 2007 we have shown a country can be prosperous and compassionate."

Mr Blair hailed Labour's record on crime, public services and reducing inequality, insisting that Britain had "seen real progress on all of these challenges".

He said: "None of this should blind us to the challenges ahead. The NHS still has big changes to make. Too many school children still fail. Crime and anti-social behaviour top the public's concerns. But the progress is obvious."

The shadow Transport Secretary, Chris Grayling, said: "Mr Blair cannot be living on the same planet as the rest of us. We are seeing hospital services cut around the country, rising violent crime, and the Government is missing its own targets on education ... The reality is that Britain is not getting the things that Tony Blair and Gordon Brown promised us."