Labour must have the "courage to change", the prime minister has told an audience of centre-left leaders.

Calling for "progressive politics" Tony Blair said he wanted to build the foundations of economic competence.

And to those warning against radical policies he stressed "there is no other way".

"To anyone who says that progressive politics can't bring together economic competence and greater social justice, I say: we have done it and what's more shown that the more opportunity, the greater the prosperity," he said.

Living with the status quo would not deliver the improvements demanded by voters, he said.

"Reform is the key to it because it is through reform and change we deliver social justice in the modern world," said Blair.

"Never forget: avoiding necessary change may be popular in the short-term; but in the long-term, it provides the ground on which the right can persuade the public that only it can bring about that change."

And he vowed to fight those in his party against policies such as top-up fees and foundation hospitals.

"The problem here is that this challenge is as much internal as external," said the Labour leader.

"The dilemma of successful progressive politics is that you are always fighting on two fronts: conservatism of the right and conservatism of parts of the left.

"Like any army in such a position, there's always a risk that you forget the one in concentrating temporarily on the other."

The prime minister said his mission was to show that "progressive reform is the salvation, not the enemy, of the causes we believe in".

And he vowed to stand firm on the "centre ground". "New Labour was successful because we fought for and won the centre ground," he said.

"We must never give it up. Not in opposition. Not now we're in government."

He warned that future policies would need to be more and not less radical.

"Fundamental to this is the re-casting of the relationship between citizen and state; to one that is neither dependency; nor abandonment; but a partnership between the two based on mutual rights and responsibilities to provide opportunity and security for all in the face of globalisation," he said.

Blair signalled the end to the "monolithic and passive" state develops a policy agenda which involves "hard choices for our own supporters".

"It means replacing monolithic, 'one size fits all' state provision with a far more flexible and adaptable system that encourages innovation," added the premier.

"We must never be the 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."

Blair said the battle of ideas had to be won by living with the world as it is.

"At the level of ideas and strategy, the left, in most of our countries, has recast itself into a broad, non-doctrinaire progressive movement," he said.

"We have sought to apply our values - not outdated doctrine - to the world as it is, and opened out politically and socially to the middle ground of progressive opinion."

Looking to a third term he conceded that "being in power is tough".

"It involves tough choices; compromises; crises that you anticipate, crises that you don't," said the prime minister. "But used for a progressive purpose, it is always better than opposition."