Lord Mandelson has launched an outspoken attack on the "corrupt far-left" and said there should be no let up by Sir Keir Starmer in his efforts to remove the "antisemites who are still in our party in large numbers."
In a speech to over 200 Labour activists, the former European trade commissioner called for Sir Keir to show "courage and determination".
He claimed his leadership credentials were being "tested again and again" by both Jeremy Corbyn and the Unite union leader Len McCluskey.
Lord Mandelson also warned those in attendance at the online event: "People will need to see more until they can place their trust in Labour again."
It emerged last month that Tony Blair's former strategist had been called in to offer advice to Sir Keir, his shadow cabinet and other senior figures in Labour on how to channel New Labour’s "winning mentality" and on the need to shift the party away from the toxic Corbyn years.
Speaking an event organised by the Labour To Win group last week, Lord Mandelson used the famous SAS motto "Who Dares Wins" as he assessed the direction he believes Sir Keir should take at the helm of the party.
Pointing to the removal, in January, of the pro-Corbyn Scottish Labour leader Richard Leonard as a step in the right direction, Lord Mandelson added: "Keir will be tested like that again and again, by Corbyn, McCluskey, and the corrupt far left.
"By the antisemites who are still in our party in large numbers, by the same old fantasy tax and spenders, and by far-left candidates, and by the need to develop credible, affordable policies. "
He continued: “We must strengthen Keir’s hand in the tests he’s facing - show the country they have their Labour Party back again."
The 67-year-old peer then openly praised Anas Sarwar, the newly appointed Scottish Labour leader as "great".
Lord Mandelson also spoke of the impact the coronavirus pandemic has had on the political climate, admitting "Keir is not yet a fully formed leader - Covid hasn't helped."
But he contrasted the state of Labour now with how it might have been had Mr Corbyn been the leader, insisting the party would have found itself in a "terrible position."
"That's why Keir is important," continued the Labour grandee. "He exudes calm confidence and strong values.
"After the near-death of experience of the Corbyn years, we need to show we are not done."
Looking ahead to the forthcoming local council and mayoral elections in May, Lord Mandelson predicted Labour "will do well in some places" but he said the elections were an "unfair test" due to the pandemic.
He urged Labour to mount attacks on the Conservatives over their claim to be the party of low taxes. "We should not be nervous about attacking them on this," he said.
Lord Mandelson has previously made no secret of his opposition to Mr Corbyn, saying it was impossible for Labour to gain power with him as party leader.
The ex-Labour leader is currently suspended from sitting as a Labour MP following his remarks in relation to the Equalities and Human Rights Commission report into antisemitism in the party.
Mr Corbyn was initially suspended from the party over his claim that the scale of antisemitism in Labour had been “over-stated.” He has been allowed to remain in Labour, but his suspension as an MP is due to be reviewed by Sir Keir.
Last October Unite General Secretary Mr McCluskey apologised to Lord Mandelson for his use of language after suggesting "I would suggest that Peter just goes into a room and counts his gold" in a BBC Newsnight interview.
A statement from Unite, read out on the programme, said: “Mr Mandelson’s religion was not relevant to the comments made by Mr McCluskey. Indeed, to the best of our knowledge, Mr Mandelson is not Jewish. The suggestion of any antisemitic meaning to the commentary would be ludicrous.”
Lord Mandelson's father Tony was advertising director at the JC and his grandfather Norman the founder and president of Harrow United Synagogue.