The BBC's Robin Oakley: "Mr Blair's frustrations are beginning to show"

He said years of snobbery in the UK against those seeking to make money had to end if the economy was to thrive in the future.

He said both the Tory elite and the traditional Labour Party "showed a certain snobbery towards people who had an idea, developed it and went out and made money".

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"Too often in Britain, if people saw someone with money, they were jealous of them, whereas in the US they wanted to emulate them," he said.

"The old right-wing elite regarded entrepreneurs as beneath them.

"The left regarded them as anti-social. When we should have been hugely proud of our successful entrepreneurs, we tended simply to wait until they fell flat on their faces and if possible helped them do it."

Front-line troops

The prime minister told his audience of venture capitalists that this culture was changing "but not nearly fast enough".

He added: "I want this government to be the champion of entrepreneurs.

"We need society as a whole to applaud you - you are the front-line troops of Britain's new economy."

The £50m funding would be spread among the regional development agencies.

Proposals are being invited for the design and running of the funds which would invest money in businesses - providing what is known as venture capital.

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By bringing in public finance, the aim is to encourage private individuals or firms to invest some of their venture capital funds in the sort of small, high-risk firms which they might otherwise shun.

Mr Blair said the fund had to build on - rather than duplicate - existing sources of funding from banks and existing venture capital funds.

In the speech to the British Venture Capital Association conference in London, Mr Blair also promised that the next Budget would include "new incentives for corporate venturing".

Wal-Mart defence

He urged pension funds "to examine whether they and other institutional investors are being too cautious when it comes to venture capital and investing in early-stage companies".

Critics of his recent meeting with the bosses of the Wal-Mart store chain, which is moving into the UK, were misguided, he claimed.

"I make no apologies for it whatever. We pay too much not just for our basic goods, but for our cars, for luxury items, across a whole range of services.

"We are overpriced compared with the USA and the reason, in part, is that there is too little competition."

He said the government was determined to increase competition through a raft of initiatives.

The UK's Opposition trade and industry spokeswoman, Angela Browning, said: "Labour is so bad for business that the prime minister has been drafted in to try to calm growing concerns.