Labour leadership candidate Ed Miliband has hit back at veiled criticism from Lord Mandelson, insisting the party needed to change.
Mr Miliband's comments came after Lord Mandelson said Labour could be left in an "electoral cul-de-sac" if its next leader tried to create a "pre-New Labour party".
Lord Mandelson appeared to be referring to Mr Miliband in particular, in what is being seen as a personal attack.
Mr Miliband said Labour must "move on".
"We need to address the country, and talk about the issues that matter to the country. And show that we can listen to the country," said Mr Miliband.
"And that means we need to change."
Mr Miliband had earlier said he can take the party beyond what he has called the "New Labour comfort zone".
In an interview with the Independent, the leadership contender said Labour had became "cautious" in government.
He said his policies would appeal to the common sense of voters.
The leadership contender suggested New Labour had feared increasing taxes for high earners, as well as displaying an aversion to Old Labour's anti-Americanism and suffered from an unnecessary desire to protect the public from the views of Labour members.
This led to a "control freak" style of party management and a "hollowed out" party, he said.
Speaking to the Times, Lord Mandelson addressed Mr Miliband's criticisms of New Labour.
He said: "I think that if he or anyone else wants to create a pre-New Labour future for the party then he and the rest of them will quickly find that that is an electoral cul-de-sac."
The peer also accused Roy Hattersley and former leader Neil Kinnock of wanting to "hark back to a previous age".
Mr Miliband's campaign agent, Sadiq Khan MP, said Labour faced a "stark choice", and only Mr Miliband could reach the voters lost since 1997.
Mr Khan added that both Labour party members and the general public would "not be convinced by hearing the same old messages from the New Labour attack machine".
Lord Mandelson has not declared his backing for any candidate, but most commentators say he favours Ed Miliband's brother, David.
Fellow leadership candidate Diane Abbott said Lord Mandelson's comments would not be helpful for David Miliband.
"If I was David Miliband I would want a period of silence from Peter Mandelson, because the impression that Peter Mandelson, Alistair Campbell, and the rest of the old crew, are pulling his strings will not be helpful in this election," she said.
BBC political correspondent Ben Wright said: "A contest that has rumbled on for months in a roadshow of hustings for Labour party members has sparked into life.
"The five candidates know that this is a critical moment in their campaigns because ballot papers are posted out on Wednesday and voting begins."
Mr Miliband's brother, David, is due to hold a rally for supporters in London later, in which he is expected to criticise the government's vision of a "big society".
The winner of the Labour leadership contest will be named at the start of Labour's party conference in Manchester at the end of September. The other candidates are Ed Balls and Andy Burnham.