The Tories must become "champions of first-class public services" if they are to defeat Labour, Iain Duncan Smith has said in his New Year message to his party.

Moving the Conservatives on from a historical emphasis on tax cuts and Europe, Duncan Smith argued that "the most pressing problem facing our country" was the issue of failing public services.

"Under Labour, we have a health service that makes people in Britain fearful of falling sick. Our schools are depriving millions of children of the opportunities that a first-class education offers. Britain's transport system makes travelling even the shortest distances in or between our cities an ordeal," he said.

Public services, once the natural terrain of Labour, will the Conservative leader believes, become the new battleground in politics, giving the Tories an opportunity to rebuild their credibility as a party of government.

"The reality is that Labour will never deliver real improvements to the public services. To them, the defence of dogma and vested interests is always more important than the needs of the public," he said. "By contrast, Conservatives must be champions of first-class public services. It must be our party that brings forward the practical solutions that offer greater diversity and choice and, above all, drive up standards."

Noting the "momentous task and huge challenge" that lay ahead for his party, Duncan Smith outlined his aim to rebuild the Tories after two crushing election defeats "so that in four years time, we are seen not only as an effective opposition to Labour, but also as an alternative government to Labour".

"Winning the next general election is the objective that must unite the entire party. Our task is a huge challenge and should not be underestimated".