Blair tries to win over internal critics for third-term programme of reforms

Tony Blair will promise today to bring in "irreversible" change to "transform" Britain into a modern, social democratic country in a shift as lasting and significant as the Thatcher revolution of the 1980s.

Launching his agenda for a third term in power in a keynote speech, the Prime Minister will acknowledge the need to win over his growing band of Labour critics. He will insist that his reforms will be in tune with the party's traditional values because they will extend opportunity to all.

Yesterday the Cabinet held a three-hour session about the Government's future direction. Mr Blair gave a veiled warning that the Government risked becoming out of touch, saying ministers had to "re-politicise ourselves so that people see we are here for the purpose of improving their lives". The Government had to show that it governed on the basis of political principles.

A new wave of reforms will be drawn up in the autumn for inclusion in the party's next general election manifesto. Mr Blair will discuss his ideas with 500 centre-left leaders, ministers and advisers from around the world at a "Third Way" conference in London this weekend.

The plans include the biggest shake-up of the welfare state since the post-war Beveridge report, to switch the focus on to young children to improve their life prospects, while encouraging old people to become "active citizens" less dependent on the state.

Another proposal is to revitalise public services to "combine equity with choice" and "break down monolithic, one-size-fits-all structures". Local people could be more involved through elected boards for schools and hospitals.

A new drive to create full employment would include "more robust" measures to get the jobless back in to work. There would be an increase in migration to bridge gaps caused by the ageing workforce, while ensuring that entrants are fully integrated into society.

Mr Blair will outline his "Third Way" credo in his opening speech to the Progressive Governance conference today.

* Peter Hain, the leader of the Commons, said ministers should be less concerned about "alienating ... middle Britain" because it understood Labour's agenda. He said on BBC Newsnight that the Government should make a virtue of "redistribution" while moving social justice to the top of its agenda.