Clinton and Blair will lead the centre left think session

Recasting Britain's public services is the key to Labour winning the centre ground at the next election, Tony Blair has said.

In a speech to a conference of centre left political leaders, Mr Blair warned of the risks facing Labour when it fights the Conservatives to win a third term in power.

Mr Blair said his government had to battle against both the right-wing and conservative parts of the left-wing.

Former US President Bill Clinton and South African President Thabo Mbeki are among those attending the conference in London, organised by former cabinet minister Peter Mandelson.

Mr Mandelson's Policy Network think-tank has arranged the three days of talks to discuss the way forward for centre left politics.

New Labour was successful because we fought for and won the centre ground - we must never give it up Tony Blair Analysis: Don't mention the third way

Dozens of leaders from Germany, South Africa, Brazil and a number of other countries are attending the Progressive Governance Conference, which opened with Mr Blair's speech on Friday.

Mr Blair is trying to show that his party and his politics have not run out of steam, with some seeing his speech as the opening shots for the next general election.

Arguing that other parties had much to learn from New Labour, he said the next election would be an almost traditional battle "with a right wing more hard to the right than ever before".

He said: "New Labour was successful because we fought for and won the centre ground.

"We must never give it up. Not in opposition. Not now we're in government. And reform is the key to it because it is through reform and change we deliver social justice in the modern world."

'Change-makers'

The prime minister spoke of replacing "one-size-fits-all" state services with more flexible systems and devolving decisions to the front line.

"We must never be defenders of the status quo," he said. "We are the change-makers. And however painful the change, it is worth doing because a reformed welfare state is the only way to social justice in the 21st century."

Peter Mandelson insists the third way is still going strong

Mr Blair specifically defended his plans to allow universities to charge top-up tuition fees, warning that without change few European universities would make it into the world's top 20 academic institutions.

Rather than "stealing the right's clothes", such changes marked a return to Labour's roots, he argued.

Mr Blair also warned fellow centre left leaders to resist anti-Americanism and anti-globalisation.

Conservative shadow chancellor Michael Howard accused the prime minister of putting off delivery until a third term because he had failed so far.

He added: "This is the clearest indication yet that Tony Blair and Gordon Brown intend to put up taxes again.

"Labour have already put up taxes 60 times since 1997, and we are not seeing the public service improvements promised."

And Liberal Democrat leader Charles Kennedy said: "Labour do not appear to have learned from the Conservatives that a relaunch always suggests that the project in question is already grounded," he said.

"There is surely a contradiction in talking about the 'progressive' left when so many of the prime minister's own supporters find his policies increasingly regressive."

'No ideological compass'

There have been suggestions that the "third way" politics espoused by Mr Blair and President Clinton have been on the wane amid the centre right victories of recent years.

But ahead of the conference, Mr Mandelson said the timing was ideal because voters on every continent were discarding "right wing neo-liberal dogma".

He continued: "The third term, for which I believe in a sense the starting pistol is going to be fired today, I think is all before us."

Sir Bill Morris, outgoing general secretary of the Transport and General Workers' Union, said all government got blown off course, especially after six years in power.

"I don't really believe you can sustain a radical reform programme without an ideological basis or an ideological compass," he told BBC Radio 4's Today programme.