Ms Blears says the party's mood is "upbeat"

The party has been hit by developments in the cash-for-honours probe and infighting over Tony Blair's departure.

But Ms Blears said morale was not low as members headed to Manchester this weekend and there was no sense that the "end is nigh".

It comes as a poll in the Guardian suggests two thirds of voters think the government has run out of steam.

The public also think Conservative leader David Cameron would make a better prime minister than Gordon Brown, the ICM poll suggests.

This year's conference will be Mr Blair's last as Labour leader.

I think an election on the horizon has a remarkable effect on your discipline Hazel Blears Analysis: Blair's farewell

'Upbeat'

In an interview with GMTV to be broadcast on Sunday, Ms Blears says the backdrop to the conference "is very unusual but it's also quite an exciting time for us".

She said she wanted to see "open" debate about the party's future policy direction.

But in an interview with she said party members and MPs would want more than just a "show of unity" but to be "really united".

Ms Blears insisted the mood within Labour remained "upbeat", despite this week's revelation that biotech mogul Sir Christopher Evans - who lent the party �1m during last year's election campaign - had been arrested by police investigating the cash-for-honours affair.

Party funding

She added that forthcoming tests at the ballot box - with May bringing local elections and crucial votes in Wales and Scotland - could be just what the party needed.

"I think an election on the horizon has a remarkable effect on your discipline and single-mindedness. It concentrates minds wonderfully," she said.

She also confirmed leaked reports that Labour wants a cap on election spending of �15m and further caps on spending at national and local level.

The proposals are contained in Labour's submission to the Sir Hayden Phillips' review of party funding.

If such measures were implemented, Ms Blears said, they would lessen the pressure to chase big donors, forcing party's to raise more funds at a local level.

'Cosy cash'

Labour is due to debate the future of party funding on Monday, with Ms Blears expected to call for Labour to be given access to so-called "Short money".

This is the public money given to opposition parties - named after former Labour minister Ted Short who campaigned for its introduction - to help with research and campaigns.

Ms Blears said giving Labour - or whichever party was in power - access to Short money would create a "level playing field".

But Conservative chairman Francis Maude said he would fight such a move.

"Voters shouldn't be asked to contribute more towards the funding of parties without fundamental reform," said Mr Maude.

"By rejecting out of hand any change to the cosy cash for favours relationship between Labour and the unions, Hazel Blears has made that sort of reform very difficult."

Poll findings

The ICM poll published earlier by the Guardian will make grim reading for Labour strategists ahead of this weekend's conference.

Some 64% of respondents said the government had run out of steam, while 69% thought it was the most divided party in the wake of infighting over Mr Blair's departure date.

A majority of 62% said Labour did not deserve to be re-elected. Asked who would make the best prime minister, 35% plumped for Mr Cameron, while 32% backed the current chancellor.

However, despite the negativity, Labour's overall support climbed by one percentage point to 32% - still four points behind the Tories on 36%.

ICM interviewed a random sample of 1,066 adults across the country by telephone on September 19 and 20. The results were weighted to fit the national profile.