Gordon Brown has admitted that Labour needs to be "bolder" in order to win a fourth term as speculation mounted that he will call a general election next month.
A Downing Street memo leaked to The Independent says Labour must build on Mr Brown's solid start as Prime Minister at its annual conference in Bournemouth starting tomorrow rather than rest on its laurels.
There is growing talk in Labour circles that the Prime Minister will call an election on 25 October. Staff at the Saatchi & Saatchi advertising agency who are working on the Labour account have been told to cancel any holidays they have booked for next month. Number 10 is canvassing the views of Labour advisers on whether there should be a snap election.
Although the Prime Minister will not fire the starting gun during the Labour conference, he is keeping his options open and could call an election shortly afterwards.
On Monday, Mr Brown is expected to devote much of his first Labour conference speech since becoming leader to his long-term policy agenda rather than attacking the Tory opposition. A string of policy announcements from ministers is expected.
The memo, sent to Cabinet ministers this week, says: "The focus of our conference will be on the future and setting out the next steps forward as we continue the work of change and renewal."
It says that announcements since June on housing, student finance and constitutional reforms are "just the start." It adds: "We must go much further, be bolder and more confident if we are to make the changes necessary to unleash the talents of everyone and make Britain the place it can be."
The memo says Labour needs to respond to the new challenges such as fast-rising public expectations and aspirations, globalisation, an ageing society, climate change, security and the battle for "hearts and minds" and new pressures on parents as they bring up their families.
Number 10's call for a "bolder" approach will be welcomed by allies of Mr Brown's predecessor Tony Blair. In 2002, Mr Blair told the Labour conference: "We are at our best when we are at our boldest." In a riposte a year later, Mr Brown insisted the party was "best when we are Labour."
The memo suggests Labour will portray itself as an agent for change while telling the voters that the Tories have not changed despite their "gloss and PR" under David Cameron. It claims: "They are as unreformed, unreconstructed, opportunistic and divided as ever."
Brown aides believe the Conservatives' attacks on the Government over the Northern Rock crisis may make them look pessimistic and backfire. They insist they will be delighted to fight the next general election on the economy.
A survey by ICM for BBC2's Newsnight suggests the Northern Rock affair has not damaged Labour's economic credentials. Asked which party had the best economic policies, 34 per cent named Labour, 22 per cent the Tories and 15 per cent the Liberal Democrats. Some 19 per cent said they did not know.
The poll pointed to a high level of confidence among voters about the economic climate and their own financial prospects. Some 10 per cent of those questioned said they were very confident about the economic future and 61 per cent were fairly confident, against 21 per cent who were not very confident.
Labour insiders who are urging Mr Brown to call a snap election seized on a symbolic victory in a council by-election as evidence that "Gordon's Tories" were returning to Labour.
The Tories lost control of Worcester City Council when Labour achieved a 17.6 per cent swing. At the 1997 election, the support of "Worcester woman" was seen as critical to Mr Blair's landslide victory. But the Tories insisted that local factors at work in Worcester meant the result did not reflect the political landscape as a whole.
The Tories said that since the last general election, their share of the vote in council by-elections has gone up by 1.75 per cent while Labour's has fallen by 2.67 pre cent.Reuse content