Miliband distances himself from boom and bust years

But the Labour leader defended the level of state expenditure sanctioned by Mr Brown as Chancellor and Prime Minister, and rejected as a "dangerous myth" Conservative and Liberal Democrat claims that it was excessive public spending that caused the recession.

Mr Miliband accepted that Labour faces a challenge to persuade the public that it can be trusted on the economy following the financial crisis of 2008 and the huge state deficit that followed.

In an interview on BBC1's Andrew Marr Show he attempted to draw a line by acknowledging the mistakes made under Mr Brown's leadership.

"We should have acknowledged earlier, after the financial crisis happened, that eventually there would have to be cuts under Labour," said Mr Miliband. "Our plans involved cuts and we should have acknowledged that. The problem we faced was that we sometimes looked like we were pretending there weren't going to be cuts under Labour, when there were."

Mr Miliband's comment is an admission that the party lost credibility due to Mr Brown's attempt to frame the 2010 General Election as a choice between Labour investment and Tory cuts, which he eventually dropped under pressure from Cabinet colleagues.

And he made clear that the Labour administrations of Mr Brown and Tony Blair relied too heavily on the City for economic growth and failed to keep a tight enough grip on risky activities in the Square Mile.

"I think we should take our responsibility for not having regulated the banks sufficiently, along with governments around the world," said the Labour leader.

He implicitly criticised New Labour's handling of the City when asked if he would follow his predecessors' economic policies if he won power, telling Andrew Marr: "I wouldn't do it all again. What I would do is take every action I could to avoid a financial crisis, because that's the thing that drove the deficit up. That's the lesson we have got to learn."

And he explicitly admitted that Mr Brown blundered with one of his favourite and most often-repeated boasts: "Clearly, we should not have said there would be no boom and bust."

Of Tory economic policy, he said: "What I am not going to do is buy into an argument about the future of this country which I think takes us in the wrong direction."

Mr Miliband insisted that until the financial crisis, the annual state borrowing of two per cent of national income was "manageable". It was the reduction in tax revenue due to the banking crash which drove the deficit up beyond 10 per cent and made it a problem, he said.

The coalition Government was seeking to justify an additional 30bn in cuts and 10bn in tax rises, on top of Labour plans, by claiming that overspending was at the root of the crash.

"The Conservatives and Liberal Democrats are peddling a very dangerous myth, because they want to tell people that it was somehow all because of a decade of overspending under Labour. It wasn't – it was because of a financial crisis all around the world," said Mr Miliband.

"The Conservatives and Liberal Democrats want to tell you that the only thing that matters in our economy in the future is to cut spending as far and as fast as possible.

"That threatens the kind of growth we need in our economy to raise people's living standards and, because of the depth of the cuts they are planning, it also threatens services that people rely on."