Looking ahead to a third Labour term, Tony Blair has vowed to press on with controversial public service reforms.

In a keynote speech in Liverpool on Friday, the prime minister sought to address Labour Party disillusionment with controversial policies on university top-up fees and foundation hospitals.

After a wave of attacks on the party's values by senior union leaders, Blair looked ahead to continuing the reform process in a third Labour term.

He said that "New Labour" was not about importing Tory values into the party but renewing its traditional values "for a changed world".

"A modernised Labour Party [is] there not just to win elections but to govern for a progressive purpose," he said.

He said that it would be "simple and wrong" to invest in public services without insisting on reform.

"Our mission in the second term is not to defend the welfare state...our mission is to renew it," he declared.

"The alternative to that renewal is the Conservative Party alternative."

Blair conceded that for some on the left, NHS reform was "difficult" but appeared to partly blame presentation rather than policy for backbench and grassroots unease.

"Sometimes in government we can become so focused on getting the change done that we explain what we are doing but we don't always talk about why we are doing it," he said.

"It can comes across as a bit technocratic, a bit managerial. For the public, and sometimes for the party, the reason for reform is not always clear.

"But the purpose of reform is precisely to give effect to Labour values. It is to open up opportunity, to provide high quality health care or education based not on wealth, but on need. It's very purpose is social justice but in a changed world."

And Blair said that extra investment would have to be matched by reform.

"The problem with choosing just a bit more of the same sort of public services is that often those public services do not reflect the reality of how we live our lives today."

He said NHS foundation hospitals would be rooted in local communities and remain free at the point of use.

"It will be the absence of reform, not its existence, that will harm us if we fail to pursue it," the party was warned.

On top-up fees, Blair said that funding per student had been falling while university lecturers are badly paid.

He said that paying back some of the costs of tuition after graduation was "fairer and better" than the alternatives.

Admitting that the party had faced tough times during the Iraq war, Blair said he would stand firm.

Labour would also reject media pressure to adopt a more sceptical attitude towards the European Union, he added.

While short term decisions could be "painful", the prime minister said that he would "stick at it" to ensure his policies were implemented.

"Our ambition is to go much further than before. To fight and win a third term," he said.

"It will take new energy, new resolve and new determination.

"People are asking the question of us and our answer must be a resounding yes, we are up for the fight, we want to build on what we have done."