Ed Miliband has warned that Labour could not afford simply to wait for the coalition to "screw up" if it was to regain power at the next general election.
Launching a wholesale review of party policy, he said they had to move "beyond New Labour" and demonstrate that they could re-connect with the "hopes and aspirations" of the British people.
Addressing MPs, trade unionists and activists at the party's National Policy Forum in Gillingham, Kent, he said that they had once again to become a "campaigning force" throughout the country.
"We have to show again we are the people who are the idealists, we are the people who are the optimists, we are the people who can represent the hopes, the dreams, the aspirations of the British people," he said.
"So please join us on this journey. Join us on this journey which makes us once again the people's party, the party of people's hopes and aspirations, back on people's side, back in power making for the fairer, the more equal, the more just country we believe in."
Mr Miliband said that while there was deep anger at the "broken promises" of the Conservatives and Liberal Democrats, it was not enough simply to wait for the coalition to fail.
"I know that we have got to change in order to win," he said.
"There is no short cut or quick fix to this. We shouldn't mistake the anger we feel at what the coalition is doing to the country for a sense that it isn't as much about us as it is about them. The strategy that says wait for them to screw it up, simply be a strong opposition, is not a strategy that is going to work for us. We need to do that hard thinking of our own."
Mr Miliband said that he made no apology for speaking up for what he describes as the "squeezed middle" - despite criticisms that the term was too vague and ill-defined.
"People were feeling squeezed before this Government. They are feeling much, much more squeezed now this Government is in power," he said.