Could Labour turn into a liberal party after Gordon Brown is beaten?

Tony Blair has pulled the plug on Gordon Brown. That, we are told, is what lies behind the off-stage mutterings that predict the imminent demise of the Prime Minister. Labour's most successful leader has called time on the one vying to be the party's worst. The "embittered Blairites" so routinely demonised by Mr Brown are having the last laugh.

The notes being passed back from the first-class cabin where Mr Blair spends most of his time these days say the game is up. The Labour Party that won three landslide elections is in imminent peril of being wiped out for a generation. The man who made it a success does not want to see his legacy destroyed.

That Mr Blair has tipped Mr Brown the black spot is meant to explain the sudden acceleration of activity at Westminster. Speculation is turning into action. Those convinced that the future of the party depends on easing him out of office by whatever means they can find are on the march. Something will happen, they say, after the June elections.

But ask what and they go quiet. They pray Mr Brown might go voluntarily, in a final act of sacrifice for the party, garlanded with praise for the way he got the country through the economic crisis. Or they wait for an event – catastrophic revelations on expenses, for example – to force his hand.

It is traditional at this point to enter a number of caveats that even now make it difficult to predict that Mr Brown will be replaced before polling day: Labour does not have a tradition of regicide, party rules make it difficult, and there is no obvious volunteer. I say volunteer because, while candidates can be identified, which politician with any sense would wish to go down as a brief footnote to defeat, under the spiteful gaze of an ousted leader lurking on the back benches? Doing nothing is often the easiest course. "His going would be liberating, but such hard work to make it happen," one player tells me.

For the moment though, this is not how Peter Mandelson sees the future. He remains critical to Mr Brown's fortunes. Along with Ed Balls – "We're his oldest and dearest friends: I'm the oldest, Ed is the dearest" – he now convenes a weekly meeting of Downing Street folk to map a way out of the mess and restore political discipline. The Prime Minister, he believes, can only prevail if he puts what's best for the country at the centre of all he does, and defies others to follow him.

Fight back and win, or go down fighting, must be the mantra. He is the Blairite in the machine.

It has become commonplace to reduce the dispute to a row between Brownites and Blairites, between the Prime Minister and a disaffected rump of his predecessor's followers who, in the civil war that raged from 1994 to 2007, refused to the bitter end to swear allegiance to Mr Brown. The Brown camp has kept that idea alive by periodically rebranding them, from "Blairite ultras" to "uber Blairites".

The events of the past few weeks have ripped up the old labels. Despair about Mr Brown stretches far beyond those who were never much impressed by his brand of divisive politics. Even those who championed him in 2007 look on in horror at the mess he has made. It is not just the usual suspects – Alan Milburn, Stephen Byers, Charles Clarke – who are asking "what to do?" As one MP put it, "you don't have to be a Blairite to know we are in a mess".

The terms Brownite and Blairite disguise both the scope of the disaffection that threatens Mr Brown, and the ideological debate that is beginning to emerge as different strands of the party prepare for life after defeat.

Today, the think tank Demos publishes what could prove to be a milestone in the future direction of the Labour Party. Its paper, The Liberal Republic, written by Richard Reeves and Philip Collins, sets out an elegant case for a politics centred on entrusting the individual with power. Mr Reeves reckons an unstoppable dynamic is now underway as a result of recent events: "The levees have broken. The debate about the post-Brown Labour Party is beginning in earnest, and will make defeat at the next election a certainty. This is the moment the party itself decides it can't win, and must prepare for the other side of defeat."

The idea of a Labour Party shaped by liberal republicans sets itself deliberately against the Big State politics espoused by Mr Brown and his preferred successor, Ed Balls, let alone the civil liberties-destroying authoritarian streak championed by Mr Blair and core supporters such as John Reid and Hazel Blears. It favours individual budgets for health care, backs Tory reforms on education, prefers tax on unearned income, and believes in civil liberties – all ground championed by David Cameron.

It has attracted the attention of James Purnell, who is being talked about as the liberal alternative to Mr Balls or even David Miliband, another possible contender who is identified as an heir to the more authoritarian wing of the party. Mr Purnell in turn has excited the curiosity of Jon Cruddas, the leadership wild card, who sees in the idea of liberal republicans the outline of a grand alliance between ''early Blairite'' liberals and the radical Left of the party around the campaign group Compass.

But Demos is not the only Labour outfit thinking along these revolutionary lines. Plans are afoot for a gathering in the coming weeks that will bring together Cabinet ministers, Labour grandees, policy thinkers, and – crucially – Liberal Democrats to flesh out a common ground on how to decentralise the state. The idea is nothing short of presenting Mr Brown with a liberal manifesto for the next election. Funding has been secured and a suitable venue is being sought before the invitations go out.

To outsiders this must all seem a preposterous game of deckchair arranging on the Titanic. If Mr Brown is to be ejected, who cares who does it, let alone what they argue about in the pub afterwards? Well, the Tories for a start, who will see here the first signs of a new-look Labour Party ready to fight them on the new centre ground of politics.

But that is a long way off. Labour's new factions have only just begun to form. Who knows if Purnellites v Milibandians v Ballsups will provide as much sport? Indeed, it is sensible to bet that the next leader to lead Labour into power may not even be an MP yet.

For the moment there are those praying for an ultimate irony, one that would see Mr Brown rescued by the supreme Blairite he has spent so long despising. But it may be too late for one last reunion of the old gang. The fault-lines are deepening. Time for others to take up the debate.