An “English Labour Party” could be launched next month, according to Jon Cruddas, who was Ed Miliband’s policy chief.

The MP for Dagenham and Rainham predicted the proposed group would play a “significant” role in the party and would “end up” being formally recognised in the same way as its existing Scottish and Welsh divisions.

The move follows Labour’s rout in Scotland at the hands of the SNP in last month’s general election and criticism that Labour has no answer to “the English question” on devolution at a time when it needs to fight back against the Conservatives in England.

A Labour spokesman said there were “currently no plans” to set up an English Labour Party. However, Labour sources confirmed that MPs were discussing the idea and taking “an increasing interest” in it. They said the moves were at an early stage and would require approval by the party’s national executive committee.

If he wins enough support from English Labour MPs, Mr Cruddas could press ahead without official approval. A website, englishlabour.co.uk, has already been registered by Jamie Reed, a Labour health spokesman.

Mr Cruddas resigned from the Shadow Cabinet immediately after the election to hold his own inquest into Labour’s shattering defeat.

He told the Institute for Public Policy Research think tank the fact that Labour does not recognise an English group in its constitution “speaks volumes”. He added: “I think it will be a very significant new part of the Labour infrastructure.”

He revealed that the plan was discussed at a “clandestine meeting” of Labour figures, including Manchester City Council leader Sir Richard Leese and former Cabinet minister John Denham, during the party’s annual conference last year. “Since the election, that conversation has been renewed,” he said. “There are a group of people who are going to push it forward over the next month.”

The MP also disclosed that a senior party figure had warned there were only a “couple of years to save” Labour, adding: “That sounds melodramatic but I don’t think it is.”

Mr Cruddas said the party needed to win back both middle class and working class voters - saying Labour seemed to have “lost everywhere to everyone” at the general election.

Earlier Alan Milburn, the Blairite former Cabinet minister, criticised the way the party had distanced itself from Mr Blair’s legacy under both Gordon Brown and Mr Miliband. He said this had persuaded voters that Old Labour was back.

In a withering assessment of Mr Miliband, Mr Milburn told the Centre for Social Justice think tank: “We had the wrong leader and we had the wrong approach. Inevitably, we paid the price. We could not have got it more wrong. We decided to ditch rather than defend the Labour government’s record, leaving our opponents with an open goal.”

The former Health Secretary warned that Labour would not regain power until it had a “reckoning” with Mr Blair’s legacy and learn from his successes. “It would be madness to allow the baby to be thrown out with the bathwater as Ed Miliband did when he unilaterally sought to bring down the shutters in New Labour,” he said. “Too many in Labour’s ranks have deliberately and destructively turned their backs on the formula that turned Labour into the dominant political force in British politics for a decade and a half. That foolish revisionism has not saved the Labour Party. It has sunk it.”

Urging Labour to reject the “self-delusion” that it could easily regain power in 2020, Mr Milburn insisted he was not calling for a return to the New Labour of 1997 but said the party should learn from its strategy while addressing today’s challenges such as identity, inequality and immigration.