Labour is facing its most difficult time but it can win a fourth term if it continues to reform along the New Labour path, Tony Blair has warned in his new year's message.
In his tenth and final end of year statement as prime minister, Mr Blair acknowledged that nine years into power and midway through a third term, "this is the most difficult time for any government".
He claimed that great progress had been made in improving the health and education systems, and in cutting crime, but warned there were "huge challenges ahead" not least for the NHS, which is undergoing "difficult and controversial" reforms.
But Mr Blair argued that New Labour had set a "new political course for our nation" that other parties now had to follow, and could continue to lead the political debate. "Others now have to develop variations on our basic theme," he said.
The prime minister has set up a series of radical and wide-ranging policy reviews to help Labour come up with new ways of dealing with the challenges of the 21st century when he is no longer leader.
They have been seen as an attempt to tie his successor, expected to be chancellor Gordon Brown, to the New Labour reform agenda and today's statement includes a warning to the whole party that it must not abandon this path.
Mr Blair said: "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."
A series of senior Labour figures, including former health secretary Alan Milburn and former home secretary Charles Clarke, have warned in recent months that the party must renew itself if it hopes to win another general election.
And today the prime minister reinforced this theme, saying that despite New Labour's dominance of the political landscape: "We must be restless not complacent. It means setting ourselves new challenges and goals.
"It needs us to recognise that just as the challenges of the last ten years will not be those of the next decade, neither will the solutions."
However, Conservative spokesman Chris Grayling rejected Mr Blair's assertions, saying he "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. Yet we are all paying vast amounts of extra money in tax," he said.
"The reality is that Britain today is not getting the things that Tony Blair and Gordon Brown promised us."