Tony Blair has attacked Conservative spending plans and urged Labour's grassroots to support the party into a third term in office.

Speaking at the Scottish Labour conference in Inverness, the party leader warned his critics not help the Conservatives return to power.

Blair also sought to explain his philosophy to the assembled delegates, insisting that New Labour was sticking to its core values and slowly shifting the political landscape.

"In seven years we've accomplished a very great deal," Blair said. "And now we have got to gear ourselves up to continue this."

He insisted that the main threat was not from the Liberal Democrats or the nationalist parties, but from the Conservatives.

"And they are a bigger threat when they get a little help from our friends...the alliance that attacks the Labour Party in government throughout its history," said Blair.

"The alliance between some of our own folk who are happier in opposition and the Tory party desperate to get out of it."

In the wake of Clare Short's latest comments, there was sustained applause for this call for Labour loyalty.

The prime minister moved on to reassure party members that the government was working to make Britain a fairer country.

He said that in government Labour had "started to reshape the politics and values of the country", forcing the Conservatives onto the back foot when it comes to promising tax cuts.

Seven years in

Blair also told his audience to accept that being in government was not easy.

"There is never enough money to go around, there is always priorities that clash, there are people that are left behind and displeased or disappointed."

But he said that the party faced a "unique time" as it continued in government for its seventh successive year.

"Yes, as government goes on it's never the same," he accepted.

"It's not like that great burst of enthusiasm [in 1997]. It is something steadier, but it is something more solid than that.  It is the solidity of real and genuine achievement."

Blair insisted he was not running a technocratic government but had been "value driven".

And despite the problems, lives had been changed for the better by the government, he argued.

"Of course there are going to be disagreements, and sometimes people will think that the values are getting displaced by the power of government," he said.

"Sometimes you will think too that it has all got too far away from the original vision that we started from. But it hasn't, it's there, it's always there."

He concluded: "If we only keep faith and don't lose heart, we'll see this through. 

"We'll win that third term and the country will be better and we'll be stronger."

Tories attacked

Blair also used the speech to mount a sustained attack on Michael Howard's rejuvinated Conservative Party.

He repeatedly sought to portray the opposition as backward looking and determined to take an axe to public spending.

The Labour leader rejected claims that the public services are failing, pointing to rising numbers of teachers, nurses and police officers.

"This money isn't wasted as the Tories say, this money is a vital part of providing opportunity and security for our future," Blair insisted.

He also attacked the Conservatives for aiming to "revive the core values of Margaret Thatcher", with senior figures wanting £65 billion of spending cuts.

"It means the wholesale elimination of public services," he warned.

"That is today's Tory party and that is why it must never get its hands back on Britain's future."

Paradox

Blair also accepted there was a "paradox" that while voters felt things were improving for them personally, they were not confident about the future of the country.

"The central paradox we face as a government and as a party is that people's optimism about their own future is not always reflected in their views about the state of the nation," he told delegates.

"Britain, not just the individuals but the nation, is stronger, richer, fairer than it was seven years ago."

However, the prime minister made no mention of whether this might be linked to rows over spin and the Iraq war which have resulted in his credibility with voters plummeting in opinion polls.