BLUE LABOUR; Blair accused of bringing in Tory-style policies.

Byline: BOB ROBERTS, Deputy Political Editor, in San Francisco

TONY Blair infuriated his left-wing MPs last night by insisting that Labour should adopt more Torystyle policies.

He said the old divide between parties was breaking down and called for a new era of "cross-dressing" in which Labour was prepared to use right-wing ideas.

He added: "Confusingly for modern politicians many policy prescriptions cross traditional left/right lines.

"Basic values still do divide along familiar party lines. But on policy crossdressing is rampant and is a feature of modern politics that will stay. The era of tribal political leadership is over."

Mr Blair's comment came during a speech made to right-wing media tycoon Rupert Murdoch and his aides in Pebble Beach, California.

He said he had faced criticism from the left for bringing in market-style reforms to the NHS where hospitals compete against each other for business. But he added: "Where leaders stand on these issues has little to do with being on the left or the right but everything to do with modern or traditional attitudes to a changing world."

His speech horrified Labour left wingers who said it was another move away from Labour's traditional values.

Labour MP John McDonnell, who plans to challenge for the party leadership when the PM steps down, said: "This is Tony Blair's final step in cutting himself adrift from the Labour Party. It is now up to Gordon Brown and every Labour MP to tell him to decide whether he is in the Labour Party or out."

There was already deep unhappiness in the party at Mr Blair's meeting with Mr Murdoch in the early hours of this morning. Many see the real purpose of Mr Blair's Californian tour as an attempt to line up jobs with big corporations after he leaves office.

They also believe he wants to raise his profile in the US, where politicians can make millions giving lectures.

Mr McDonnell said Mr Blair was "pandering to the whims of Mr Murdoch" by acting as his after dinner speaker. He added: "It's demeaning to the office of Prime Minister."

Mr Blair also toured the headquarters of the giant SISCO Systems computer firm and held meetings with business leaders.

Downing Street dismissed the criticism of the trip. It said California is the seventh largest economy in the world and it was "right and proper" for Mr Blair to try to bolster British trade with it.

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CAPTION(S):

CROSS DRESSING: Tony Blair