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Ed Miliband does not understand New Labour and faces a "huge challenge" to get Labour back on track, former ³ÉÈË¿ìÊÖ Secretary Lord Reid has said.

There had been a "vacuum in policy", he told the ³ÉÈË¿ìÊÖ's Daily Politics and "no strategic direction" for three years.

Lord Reid also praised David Cameron - saying he had been "astute" since becoming prime minister.

Plus points for Labour were the poll lead and the fact the "Lib Dems are on course for political hari kari".

Lord Reid held a host of senior roles, also including health and defence secretary, under Tony Blair but left the Cabinet after Gordon Brown became Prime Minister in 2007.

Asked about Labour's current situation, he said the party had "lost its way" after Mr Blair had left office and he said that it was still recovering.

While Mr Miliband was right to conduct a thorough review of policy, he said the leader needed to "signpost" the party's future direction as Tony Blair had done when he scrapped Clause Four.

"We have had three years or more without any strategic direction. There is a kind of vacuum in policy terms," he said.

"There are opportunities but I think the challenges that Ed Miliband faces, and the Labour Party faces, are huge."

He said comments by Lord Kinnock after Ed Miliband's election in September - in which the former Labour leader said "we have got our party back" - were "pretty offensive" given Labour's record in office and its three election victories.

And he warned Mr Miliband about distancing himself too much from New Labour.

"I don't think he understands New Labour quite frankly. What I have never understood is the statement that we need to renew ourselves therefore we have to abandon New Labour."

Labour needed to be in the centre ground, he added, although there was a case for the opposition being "to the right" of the coalition government on security and penal issues.

"Do not assume you can just be to the left of this coalition government," he said. "Let's get away from trying to argue we are for investments and the coalition is for cuts."

Asked about David Cameron's performance, he said the prime minister was "growing into the job".

"I think he is a better prime minister than he was leader of the opposition," he added.

"If he had been as successful as leader of the opposition as he now is as prime minister, and as astute, than the Tories would have an overall majority."