John Prescott urged more substance and less rhetoric just over a week after the resignation of arch-moderniser Peter Mandelson.

His comments in a newspaper interview appear to have been made with the explicit backing of Chancellor Gordon Brown.

This led the Conservative opposition to declare a new faction at the heart of government - after allegations that internal feuding led to Mr Mandelson's downfall.

But Mr Prescott seems to be trying to lead a move away from the direction designed for New Labour by Mr Mandelson when he guided the party to election victory.

Roger Berry: Public spending must be used to control economy

The deputy prime minister said: "We have decided that public expenditure is there to uphold the economy in the traditional Keynesian way."

Roger Berry MP, who chairs the full employment forum, backed this view and called on the chancellor to act on it.

"Governments can't simply sit back and let the economy decline," he told BBC Radio 4's World at One.

Roger Berry supports return to Keynesian economic policies

"I would hope the chancellor is looking at ways of bringing forward some of the capital projects he has approved over the three-year term to next year in order to help the economy and prevent unemployment."

Ian Gibson, vice chair of the MSF group in Parliament and Andrew Mackinlay, who represent Labour backbenchers on the parliamentary committee of the party in the Commons, also welcomed the deputy prime minister's remarks.

But Commons Leader Margaret Beckett denied the message being put out by either Mr Prescott or Mr Brown was substantially different to that contained in Prime Minister Tony Blair's new year address.

Speaking to the BBC at the weekend, the prime minister dismissed the suggestion Mr Mandelson's resignation would have any impact on Labour's policies.

The deputy prime minister's comments are prompted by the resignation of Peter Mandelson

"There will be a certain number of people who will be foolish enough to think that Peter's going means that somehow there's some blow to the project of New Labour.

"That goes on. We got elected as New Labour. We'll govern as New Labour."

Margaret Beckett: No conflict within government

Speaking on the World at One, Ms Beckett re-enforced this 'business as usual' message.

"Part of what we have done in this government is to try to bring the British people as a whole together - to emphasise the need for a new kind of partnership.

Beckett and Blair: Playing down calls for change in direction

"Of course I accept that within that there will be people who are disappointed that we're not able to go faster."

But the significance of Mr Prescott's comments is underlined by his other remarks in The Independent regarding his new relationship with the chancellor.

He said: "There is a myth that Gordon and I don't get on.

"Our relationship is excellent and has been for quite a while. There is less tension between us because it's quite clear I need to get some of the changes in the financial rules to be able to deliver."

The pair now agreed a new direction was needed for the Labour project in government, Mr Prescott said.

"We need to get away from rhetoric and back into the substance of government."

Shadow Trade Secretary John Redwood said the new partnership was part of a Treasury plot to undermine the prime minister.

"The civil war is evidently hotting up," he said.