The Labour leader said left-wing parties across Europe were losing ground because they had allowed their principles to be “diluted” to the point where voters no longer knew what they stood for.
Addressing the Party of European Socialists conference in Prague, he said that too often the left had been seen as “apologists” for a “failed” economic model rather than a vehicle for change.
And faced with the “challenge” of rising migration, he said it was essential they did not allow their rhetoric to legitimise the “scapegoating” of refugees and migrant workers which simply played into the hands of the right.
His comments will be seen as both a repudiation of the record of New Labour under Tony Blair and Gordon Brown and a warning to senior figures in the party such as deputy leader Tom Watson who have been calling for tighter controls on EU immigration.
His intervention came as the populist right has been emboldened by the vote for Brexit and the success of Donald Trump in the US, with the Freedom Party challenging for the presidency in Austria and Marine Le Pen’s National Front hoping to do well in France.
While Mr Corbyn acknowledged it was “difficult” to convince the unemployed the reason they could not find work was not because immigrants were “stealing their jobs” but the result of the failed economic programme of the right, he said it was “vital” they did so.
“We cannot abandon our socialist principles because we are told this is the only way to win power. That is nonsense,” he said.
“The reason we are losing ground to the right today is because the message of what socialism is and what it can achieve in people’s daily lives has been steadily diluted. Many people no longer understand what we stand for.
“Too often in recent years the left in Europe has been seen as apologists for a broken system rather than the answer to how to deliver radical social and economic reform for the 21st century.
“If we are only seen as protectors of the status quo how can we expect people to turn to us when they can see that status quo has failed? We must stand for real change, and a break with the failed elite politics and economics of the past.”
Mr Corbyn said that while the populist right had identified many of the “right problems” at a time of growing insecurity and declining living standards, the solutions they offered were the “toxic dead-ends” of the past.
“They are political parasites feeding on people’s concerns and worsening conditions, blaming the most vulnerable for society’s ills instead of offering a way for taking back real control of our lives from the elites who serve their own interests,” he said.
“We cannot allow the parties of the right to sow divisions and fan the flames of fear.”