The sudden resignation of junior Defence Minister Peter Kilfoyle last weekend has highlighted tensions within the Blair government.

Kilfoyle, an under-secretary of state at the Ministry of Defence, informed Blair of his decision in a letter on January 30. He wrote that he had concluded he should return to Labour's back benches so as to focus on the challenges "within the regions of England and the heartlands of Labour".

Kilfoyle earned his spurs in the Labour Party 20 years ago when, as its northwest regional organiser, he helped carry out the witch-hunt of the Militant Tendency. For some 30 years, Militant had functioned as a left protest group within the Labour Party, attempting to pressure its leadership to adopt a more radical programme of social reforms. By the 1980s, however, the Labour Party under Neil Kinnock was seeking to distance itself from its reformist past and so the Militant group was pushed out. Kilfoyle was rewarded for his work with the safe Labour seat of Liverpool Walton, and entered parliament in 1991.

In 1994 the MP was recruited by Blair to help organise his bid for Labour leadership. As a "Blair loyalist" Kilfoyle has been a firm defender of Labour's orientation to the City of London and former Conservative Party voters. Blair had claimed that this orientation would enable Labour to build a strong "coalition of forces" that would keep the Conservatives out of government for years, if not decades. Politically, "New Labour" would combine Thatcherite policies, such as tax breaks, cuts in public spending and "law-and-order" measures, with an apparently liberal approach to sexual and racial issues.

The success of this "third way", as it has become known, was predicated above all on excluding the working class from political life. The Blair leadership arrogantly assumed that the collapse of the Soviet Union and the "socialism is dead" campaign would ensure that, whilst working people might not like Labour's policies, they would have nowhere else to go. Kilfoyle shared this belief and for the past three years has defended Labour policies on workfare, cuts in welfare, attacks on democratic rights, etc.

Kilfoyle's years as the Labour bureaucracy's hatchet man, however, have given him a nose for trouble, and he smells it now. Interviewed in the Times newspaper on Monday, Kilfoyle made clear his concern that Blair's openly right-wing course is producing a political backlash that a discredited Labour Party will be unable to control.

The government is alienating Labour's traditional working class supporters, Kilfoyle said. If this continues, he went on, the danger exists that the resulting "social dislocation" could lead to a "resurgence of extremism" from the left and the right. "If a vacuum is created, we should not be surprised by what ends up filling it", Kilfoyle warned.

In another interview with a Liverpool radio station, he cautioned that continually ignoring local people's concerns meant Labour would create an "American-style situation," where barely half the population votes in general elections.

This situation already exists in Liverpool, which has the highest unemployment rate in the country and one of the greatest concentrations of poverty. Changes to Local Authority financing mean that whilst resources in education and health have been cut, working people must pay the highest local council tax rates in the country.

In local elections last year, less than 20 percent of the city's population turned out to vote. Consequently, Labour lost its control of the Local Authority to the Liberal Democrats and now controls less than one-third of the seats on the council. According to reports, Labour in Liverpool is losing its membership at such a rate that the party does not have enough candidates to run in the next local elections.

A similar state of affairs can be seen across the country. In the first by-election of the New Year, in Wales on Thursday, less than half the registered voters turned out, and Labour slumped to fourth place, behind the Tories.

Kilfoyle has announced that he will set up a "heartlands" group of Labour MPs. This group will lobby the Treasury to confirm the amount of central government money each region is to receive this year, a necessary stage in triggering European Union payments to deprived areas. The government has held off on any announcement, causing some MPs to worry that the public spending cuts could jeopardise millions in EU aid.

The former minister stressed that his actions are not meant as a political challenge to the Labour leadership and that he remains the prime minister's "loyal critic". The issue "is as much about our use of style and language as it is about substance", he said.

There is every indication that the Liverpool MP's concern over regional funding is bound up with his own hopes of becoming the city's elected mayor, under Labour's plans for a devolved Northwest Assembly. Nonetheless, for Kilfoyle to conclude that his personal ambitions would now best be served by distancing himself from Blair underscores the gulf that has opened up between the government and working people.