A former Labour minister has hit out at the government's "Thatcherite belief in markets".

Angela Eagle published a pamphlet on Monday arguing that the prime minister has failed to develop a social democratic alternative to 1980s Conservatism.

The Wallasey MP wrote in a paper for think tank Catalyst that plans for variable university tuition fees were the latest example of the creeping privatisation of the public sector.

"The proposals to create a market in university degrees and institutions is a demonstration of the disappointing tendency of the government to resort to market mechanisms as a proxy for public sector reform," Eagle wrote.

"Whilst a student contribution to fees may be the best solution to funding the continued expansion of higher education, no argument has been won about the merits of allowing market forces to embed the existing class privilege inherent in the system still further."

The former Home Office minister has been at the forefront of a new group of Labour MPs who have stepped up their criticism of Tony Blair.

Launched last month, the New Wave group are mostly loyal to the party leadership but have grown disenchanted with the government's second term direction.

Eagle's pamphlet is the first joint publication between the left-leaning Catalyst and the New Wave MPs.

In it she called for Labour to abandon the "accommodationist" stance of the Third Way and its "retail model" of politics.

Blair's government has been centrally managed and too reluctant to redistribute power and wealth, she argued"The aim should be to achieve a genuine empowerment and meaningful decentralisation," Eagle said.

"Turning the state into an enabler involves opening up the power structures to the people not unleashing market distribution mechanisms in the public services.

"Experiments with participatory budgeting in Brazil and genuine public consultation in the USA show a radical way forward."