Tony Blair says UK's Labour must reclaim centre ground

* Blair says Scottish issue must not force Labour to left

By Estelle Shirbon

LONDON, May 10 (Reuters) - Britain's Labour Party must return to the political centre ground if it is to rebuild support after suffering a crushing defeat in Thursday's general election, former Labour prime minister Tony Blair said in an article published on Sunday.

The Conservatives won a surprise overall majority, gaining almost 100 more parliamentary seats than Labour, and are forming a single-party government.

Labour leader Ed Miliband, widely seen as having steered the party leftwards after a more centrist period under Blair's "New Labour", resigned on Friday, blaming himself for the defeat.

Blair, the most successful vote winner in Labour's history having won three elections in a row to be prime minister from 1997 to 2007, wrote in The Observer newspaper that Labour should be more inclusive and aspirational -- comments echoed by one of the frontrunners to replace Miliband, Chuka Umunna.

"The route to the summit lies through the centre ground. Labour has to be for ambition and aspiration as well as compassion and care," Blair wrote.

"Hard-working families don't just want us to celebrate their hard work; they want to know that by hard work and effort they can do well, rise up, achieve ... We have to appeal to those running businesses as well as those working in them."

There is no guarantee that Blair's views will be well received by all. He has become a divisive figure due to the legacy of his decision to lead Britain into the U.S.-led Iraq War in 2003, now widely seen as a disaster.

However, Umunna, the party's business spokesman who is widely expected to stand for the leadership, drew a similar lesson from the election, saying Labour should have done more to attract middle class voters during the campaign.

"We talked about the bottom and top of society, about the minimum wage and zero-hour contracts, about mansions and non-doms. But we had little to say to the majority of people in the middle," he said, referring to several of the party's policies.

SCOTTISH CHALLENGE

Umunna said Labour's collapse in Scotland, where it lost all but one of the 41 parliamentary seats it previously held to the Scottish National Party, was compounded by a failure to gain any ground against the Conservatives in far more populous England.

"We targeted 80 Tory-held seats in England, but made a gain of just four ... It was in England that (Prime Minister) David Cameron won his majority and put a Labour-led government out of reach," Umunna wrote.

The divide between Scotland, where all but three of the 59 parliamentary seats are now held by the left-leaning nationalists, and England, where the right-leaning Conservatives now dominate, poses a major strategic difficulty for Labour.

There may be a temptation to tilt leftwards to try and regain ground in Scotland, but that would seem unlikely to help in England, which accounts for 85 percent of the United Kingdom's population.

In his column, Blair gave a clear view on that issue.

"We will never win it (Scotland) back by being more 'Scottish' and more 'left'. We will win when we confront the whole ideology of nationalism, which is a reactionary philosophy masquerading as progressive."

Blair said Labour should now lead the debate on why Britain should stay in the European Union, ahead of a referendum Cameron has promised to hold by 2017 after renegotiating the terms of the country's membership. Many of Cameron's Conservatives are deeply hostile to the EU. (Editing by Gareth Jones)