Alistair Campbell appealed to Burnley's voters to shun the British National Party in Thursday's council elections.
Downing Street's director of communications and strategy warned that a big vote for the far-right party would have a disastrous impact on the Lancashire town's image.
The BNP has poured resources into Burnley, which was hit by race riots last year. It is fielding candidates in 13 of the 15 wards up for election and has high hopes of performing strongly in several.
Mr Campbell, a passionate supporter of Burnley Football Club, told BBC Radio Five Live: "I really do hope people in Burnley realise the damage that would be done if they wake up next Friday and find that all people are talking about is the fact that Burnley has elected BNP councillors.
"You have got lots of major local employers saying if we wake up next Friday with BNP councillors that is going to be disastrous for jobs in Burnley, investment in Burnley and all the rest of it.
"There is no doubt at all that if the BNP have any sort of success at all it is going to give Burnley huge difficulties for the future in relation to its reputation, in relation to companies that will want to go and invest there."
He said the surprise success of Jean-Marie Le Pen in the first round of the French presidential elections should give "pause for thought" to electors in Britain.
Mr Campbell said: "I am doing this as a one-off because I do feel very, very strongly about what may happen in Burnley."
But with the BNP fielding fewer than 70 candidates in the 5,899 council seats up for grabs, Charles Kennedy, the Liberal Democrat leader, accused Labour of "talking up" the threat posed by the far-right. He said: "At the end of the day this is a minuscule as well as a malign political element in the body politic."
The Tory leader, Iain Duncan Smith, however, warned that unless mainstream politicians tackled issues such as asylum-seekers, it would play into the hands of the far right.
But the black peer, Lord Ouseley, who chaired the inquiry into the Bradford riots and a former chairman of the Commission for Racial Equality, accused David Blunkett, the Home Secretary, of pandering to the same prejudices exploited by extremists.
"What he is trying to do is occupy that space that the BNP would on the political terrain and that means he has to pitch for the alienated white working-class voter," Lord Ouseley told GMTV.Reuse content