UKIP could defeat Labour in the North unless the party embraces radical change, a leadership contender has warned.

Liz Kendall delivered an extraordinarily bleak message about her defeated party’s future, telling a Westminster event: “There is no God-given right for the Labour party to exist.”

And she focused on the rising challenge of UKIP in Labour areas, after Nigel Farage’s party finished second in a swathe of constituencies at the general election.

Those seats include Hartlepool, Middlesbrough, Easington, Gateshead, Houghton and Sunderland South, Washington and Sunderland West, South Shields and Blaydon.

Quizzed about UKIP by The Northern Echo, Ms Kendall – widely seen as the Blairite candidate – said: “They are very strong in the North and that is a real threat. Where they are in second place they can build.

“We see this catastrophic defeat but things could get worse for us – with a boundary review, with Ukip building on where they are in second place. The Liberal Democrats can only go up.

“This isn’t the worst it can get. There is no God-given right for the Labour Party to exist - and that is a huge challenge.”

Ms Kendall turned her fire on much of Ed Miliband’s record, the energy price freeze, opposition to free schools and putting a tuition fees cut ahead of better early years’ education.

In a stunning rebuke, she said: “The real tragedy is that, of people who do work, too many don’t think the Labour Party believe in hard work, responsibility, taking care of themselves and their families.

And she added: “We win when we offer hope and opportunity, not merely sympathy and grievance.

“And we win when we set out a clear direction for our country, not just a collection of causes and criticisms.”

However, asked for her solution to the UKIP threat, she replied only that Labour needed to “offer people hope that they can see their lives changing around”.

During a speech and question-and-answer session, Ms Kendall:

* Called for Labour to back the target of spending two per cent of GDP on defence – a pledge David Cameron has refused to give

* Said she would support EU membership in all circumstances, replying simply: “Yes.”

* Backed the setting up of ‘free schools’, even where there are surplus places in neighbouring schools.

* Backed devolution to local areas of responsibility for “jobs, housing, education and skills”.

* Hinted she would welcome Tony Blair’s backing for her campaign, saying: “Let’s see what happens.”

The shadow health minister will do battle with Andy Burnham, the Shadow Health Secretary, and Yvette Cooper, the Shadow Home Secretary, in a contest to be settled in September.

Mr Miliband resigned after Labour slumped to 232 MPs, its worst election result for almost 30 years, falling 99 seats behind the Tories who secured a surprise overall majority.