Charles Clarke has moved to bury the hatchet with Gordon Brown, acknowledging the Prime Minister had done "really well" over the past two months.

The Blairite former home secretary voiced concern in the summer that Labour was "destined to disaster" under Mr Brown, then under attack from a section of ministers and back benchers.

But Mr Clarke said the premier had demonstrated "genuine economic and political leadership at a time when it was desperately needed".

Speaking to Sunday newspapers, he said Labour could now win the next General Election. "I'm not well-known for being one of Gordon's biggest fans but I do think that since the Labour Party conference he's done really well in meeting the challenges of the world financial and economic crisis," he said.

His comments pave the way for a second major rapprochement for Mr Brown after his old foe Peter (now Lord) Mandelson joined the cabinet as Business Secretary last month.

They suggest the Prime Minister could finally be moving Labour on from the divisions between Blairites and Brownites which have dogged the party for more than a decade.

Mr Clarke said there remained a "political debate about the past", but added: "In the present, Gordon has earned the right to support from across the political and business spectrum."

He added: "It's been a real surprise to me but, to be fair, Gordon's economic self-confidence has made him more decisive on the political front.

"Winning the General Election, particularly in the marginal seats, remains a really tough call, but Labour's obviously back in the race and can do it."