They want to "re-democratise" the party, said John McDonnell

At a conference at TUC headquarters in London, party members joined forces to form the Labour Representation Committee (LRC).

The committee aims to bring together those within the party who want to promote socialist policies.

"We are reclaiming and re-equipping the party that we have," former Aslef leader Mick Rix told BBC News Online.

The group will challenge the government on issues like the Iraq war, civil service job cuts and the use of private firms in the public sector.

Speakers at the conference included veteran left-winger Tony Benn, former Labour environment minister Michael Meacher, and MPs John McDonnell, Lynne Jones and Alice Mahon.

What are trying to ensure we get a Labour government elected at the next election, but on a more radical agenda John McDonnell MP

Also taking part were general secretary of the Communication Workers Union Billy Hayes and Mr Rix, who helped co-ordinate the event.

The conference also heard from an 11-year-old Iraqi girl who lost 17 members of her family in a bombing near Basra, southern Iraq.

Zeynab Tarish had a leg amputated after the attack, and was brought to the UK by British journalist Lee Gordon.

He, Zeynab and a Baghdad surgeon are to call on the government to provide help for Iraqi children left as amputees by the war.

Former train union leader Mr Rix said: "This movement may not bother Tony Blair at the moment but I think it will bother people like Tony in the future."

'Reactionary employers'

The name of the committee was chosen to reflect its place as a direct predecessor of today's Labour party.

In February 1900 representatives of all the socialist groups in Britain met with trade union leaders in London.

Delegates passed Kier Hardie's motion to establish "a distinct Labour group in Parliament", and to make this possible the conference established a Labour Representation Committee (LRC).

Hayes and Harlington's Labour MP John McDonnell said the new group wanted to "re-democratise" the party.

Left-winger Tony Benn is among those challenging the government

"What we are trying to do is ensure that we get a Labour government elected at the next election, but on a more radical agenda.

"It is about supporting public services and not privatising them. It is about not going to war, and it is about peace.

"It is about employment rights as well. People are losing their jobs and having their working conditions undermined because of the actions of some very reactionary employers.

Fellow left wing MP Alice Mahon said: "I think rank and file members are asking for us to do what we were born to do and that is to promote social justice.

She said the committee wanted to get back to the ideals that founded the Labour Party.