Cameron: We were wrong to call Mandela a terrorist

David Cameron has made another decisive break with the Conservative Party's past by admitting that Margaret Thatcher had been wrong to brand Nelson Mandela's African National Congress (ANC) "terrorists" during the struggle against apartheid.

The Tory leader, who met Mr Mandela during a visit to South Africa last week, said: "The mistakes my party made in the past with respect to relations with the ANC and sanctions on South Africa make it all the more important to listen now. The fact that there is so much to celebrate in the new South Africa is not in spite of Mandela and the ANC, it is because of them - and we Conservatives should say so clearly today."

Writing in The Observer, Mr Cameron praised the former South African president as "one of the greatest men alive" and said his overwhelming impression was "not how violent the armed struggle or Soweto uprisings were, but how restrained".

As Prime Minister, Baroness Thatcher refused to back sanctions against South Africa and pursued a policy of "constructive engagement".

Lord Tebbit, her former party chairman, accused Mr Cameron of failing to understand what happened. "Because of his age, Mr Cameron is looking at these events as part of history. Others of us who lived through them and had input into the discussions at the time see things very differently," he said. "The policy of the Thatcher government was a success."

The Tory leader will be relaxed about Lord Tebbit's criticism, hoping that it will help him to send a signal to a new generation of voters that the party is changing. But his ally George Osborne, the shadow Chancellor, denied that the leadership was ditching Thatcherism. "We don't want to pick a fight with our party members. Nor do we need to pick a fight with the memory of Margaret Thatcher, or with Margaret Thatcher herself," Mr Osborne said.

Interviewed in The Sunday Telegraph, Mr Osborne hinted that the limited tax cuts the Tories are expected to offer at the next election could involve abolishing stamp duty on share transactions.

The Treasury challenged the Tories to explain how they would find the money. "Anyone who wants to abolish this tax needs to explain how they will plug the £4bn gap in the public finances it would leave, and pay for the vital public services it funds," a spokesman said.