MARKING its 100th anniversary, Labour finds itself not only in power, but more powerful than it has ever been. Yet, amid this success, the leadership is beset by grumbles from the grassroots and even faces the prospect of a giant rift if Ken Livingstone goes it alone in the bid to be Mayor of London.

In short, the grouse is that, at the top, Labour has lost touch with its heartlands and become too 'Tory'.

As a result, its control-freak leader is reaping the disillusion with signs of the discontent manifesting themselves in the recent resignation of junior minister Peter Kilfoyle and the strong support for Mr Livingstone, who was prevented from running as Labour's candidate in London.

Tony Blair has met these charges by stressing just how 'socialist' New Labour has remained in its 33 months in power.

He points to his administration halving long-term unemployment and the young jobless, increasing child benefit by record amounts, bringing in the minimum wage, cutting VAT on fuel bills, giving pensioners £100 to heat their homes in winter and introducing free TV licences for the over-75s.

Such are, of course, classic credentials of Old Labour.

But Mr Blair can hardly expect the party or the electorate to believe that Labour's soul is unchanged.

Not when he personally epitomises the ideological revolution that it has gone through in order to appeal, not just its heartlands, but the country as a whole - and to win power.

He is right, then, to couple a warning with these testimonials, which he claims show that new Labour has not lost touch with its origins or its traditional supporters.

He warns that the party must retain faith with the voters who backed it at the last election and that this must be done by maintaining a broad 'middle ground' appeal.

A lurch back to the Left would put it firmly back where it was when it was ideologically fixed in that direction in the early eighties - namely, in the political wilderness.

Mr Blair's problem is an increasingly real one.

It is the resistance that builds up when his authority is imposed to prevent the party being tugged ideologically away from the centre, as with the backlash over the leadership's intervention in the selection of candidates for the Welsh Assembly and for London.

Mr Blair is telling the dissenters he knows best.

And certainly staying on the middle ground is best for Labour's hopes of keeping power.

But it will not stop many in the party wondering whether its soul has been sold in the quest for it .

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