Labour chairman Hazel Blears has urged activists to prepare for a general election "which may be less than 16 months away".
Ms Blears warned of a resurgent Conservative Party, it is reported
A letter warns of "real challenges", including a change of party leader - widely expected to be Chancellor Gordon Brown - and a Tory "comeback".
An election in spring 2008 would come two years before the government has to go to the polls again.
The Conservatives said the "sooner" an election was held "the better".
The Liberal Democrats said they were "ready and waiting" for an election.
Tony Blair is expected to stand down as prime minister before next autumn, with Mr Brown, the chancellor, favourite to succeed him.
Ms Blears' letter, written on Labour-headed notepaper, says: "In the New Year we face real challenges, the election of a new leader, local elections and the need to prepare for the forthcoming general election, which may be less than 16 months away."
She adds: "The Tories are making a comeback, the next general election will not be easy.
"A swing against Labour of just 1.3% could see the Tories forming the next government."
A general election does not have to be called until 2010 - five years after the last one.
A Conservative Party spokesman said: "If people want change, they will have to vote for it.
"The sooner they get to vote on Blair and Brown's hospital cuts, failing schools and destroyed pensions the better."
Giving his reaction, Liberal Democrat campaigns chief Edward Davey said: "We are ready and waiting, and so are the British people.
"They deserve to deliver a verdict on Gordon Brown's abject failure in areas like the health service and the environment.
"We all want a chance to have a proper debate with the man who has signed all the cheques for the Iraq war."