In a Sunday Times interview, he says he believes voters will soon resent the government's tax rises because public services are not improving quickly enough.

Mr Duncan Smith promised to reveal a new initiative over the next few months to give his party a "coherent message".

He told the paper the Tories were still not seen as a "credible alternative" to Labour.

There isn't at the moment a positive sense that there is an alternative in terms of how people should think of the next government Iain Duncan Smith Conservative leader

An opinion poll last week put the Conservatives on just 27% - only slightly ahead of the Liberal Democrats.

The Tory leader told the paper: "I know this much: as an abiding principle an incoming Conservative Government will be a lower-tax, lower-regulation government than this government is."

Up to now, the Conservatives have not revealed their tax policy, fearful of critics accusing them of cuts to public services.

Mr Duncan Smith said the party had to make its position on tax and de-regulation "absolutely clear" if they were to start winning back voters.

'Disaffected'

"We have to be a credible alternative for them to come to us. There isn't at the moment a positive sense that there is an alternative in terms of how people should think of the next government," he said.

"The challenge over the next year is to turn the disaffected into Conservative voters and they will only do that if they think we make an alternative for them.

Ken Clarke has been tipped as a future party leader

"We are certainly going to make sure we now campaign on what we want to do and some of the things we want to bring in - much more, for example, to be absolutely clear about our position as regards to tax and regulation."

Conservative Central Office sought to play down suggestions that Mr Duncan Smith's remarks in his Sunday Times interview represented a change of direction on tax cuts.

"There is no change in emphasis. We have always said that low tax economies work better than high tax economies," a spokesman said.

"People are concerned now about Labour's failure to deliver on its promises to improve public services."

There is further bad news for the Conservatives in the Mail on Sunday.

The paper claims to have obtained a leak report of internal Tory focus groups, which show a high level of disillusionment among Conservative voters.