Labour's former deputy leader, Roy Hattersley, has launched a scathing attack on Tony Blair saying he nearly quit the party as a result of his leadership.

Hattersley, once considered to be on the right of the party, is calling on Labour's rank and file to launch a "counter coup" to restore Labour's principles.

Writing in The Observer, Hattersely said he nearly severed his links with the Labour Party. He writes: Now that the Labour Party - at least according to its leader - bases its whole programme on an alien ideology, I and thousands of likeminded party members have to decide if our loyalty is to a name or an idea".

He says he understands why many members have decided to "resign or sulk in our tents". But he warns that those who still believe in Labour values should stay and fight their corner. "Believing that the party does not belong to Tony Blair we could rise up against the coup d'etat which overthrew the legitimate philosophy".

In a scathing critique he accuses Blair of being "contemptuous of ideology" saying he is intent on forcing Labour "to move further to the right".

His comments come as Labour MPs and the unions prepare to battle against the government's move to make greater use of the private sector in frontline public services. Unison, the public service union, is leading the campaign against what it sees as the creeping privatisation of schools and hospitals.

Frank Dobson, the former health secretary, also added his voice to those calling for a rethink in policy. Interviewed on GMTV on Sunday, Dobson warned: "The boundary that had got to be drawn is that the NHS shouldn't plan to be dependent on the private sector because I think it is unreliable."

Blair's plans for further part-privatisation will be dealt a blow this week when the influential Institute for Public Policy Research attacks Labour's plans for the tube and national air traffic control.

In a report to be published on Monday, the IPPR says the private sector should not be seen as a cure to all the ills of public services. "Accessing private capital does not in itself make it easier to deliver on extra school or hospital because it in no way alters the real resource constraints faced by the public sector," the report warns.