It is almost impossible to overstate the chaos which has engulfed the Labour Party in the past week. The Blairites are openly attacking the Chancellor. The Brownites are ranting against the Prime Minister. The Labour Party itself, caught in the middle, is being spun around from pillar to post without an anchor.

The rest of us can only stand back and gawp, like rubber neckers at the scene of a car crash, at the extent to which a party, whose electoral success has been built on awesome internal discipline, has been reduced to chaos.

The supposed substance of the latest rows - the contents of the Budget, the party's local election plan, the future of the state pension and poisonous remarks from ministers to journalists - are not the real point. They are merely spurious pretexts for the rows.

The real point is that Mr Brown wants Mr Blair out, as soon as possible - and Mr Blair does not want to go. The rest is flannel.

The spat between Mr Blair and Mr Brown has developed in a 12-year long crescendo of intensity. However, matters have now reached such a level of passion, on both sides, that the Government itself is near to being out of control.

The pattern has been the same ever since Mr Blair became leader of Labour Party, a position which Mr Brown has always felt was rightfully his.

Stories of rows and plots - almost always true - are then followed by reports that the two men have stared at the precipice and decided to co-operate for their own good. And then the row kicks off again, with ever greater force and ever greater venom. And so on.

The difference now is that the glue which has held New Labour together has finally come unstuck.

That glue, of course, is the recognition by both Mr Blair and Mr Brown that a fight to the death means just that - political death for both. So long as they were willing to bite their tongues after one of these regular bust-ups, at least, a working relationship of some sort could be maintained.

That is no longer the case. Mr Blair led the way, telling an Australian interviewer that he might have made a mistake in announcing his intention not to fight for a fourth term. That comment can only have been a deliberate act of provocation, given that Mr Brown was already near breaking point in his desperation to see Mr Blair depart.

With the Chancellor having made it clear, using every means - bar actually saying it - that he wants the Prime Minister gone, pronto, the two men’s courtiers have been given licence to step up the fight. In the past, they would only be let off a part of their leashes, and then reigned in. Now, these attack dogs are going full pelt at each others’ throats.

During the last seven days, there have been a string of stories emanating from the Blairites in response to the Chancellor’s agitation. One minister close to the Prime Minister (alleged by the Mail on Sunday yesterday to be James Purnell) told one journalist over lunch that Mr Brown was plotting to oust Mr Blair. As if that was not demonstration enough of how incendiary things have become, whispers then surfaced from the Blairites that the Chancellor had deliberately sabotaged his own Budget by withdrawing the £200 pensioners’ council tax discount so that Labour would do badly in next month’s local elections, thus forcing Mr Blair to quit.

This weekend the febrile atmosphere was played out in the papers, with all sorts of wild speculation being put forward, from a suggestion by the former Labour spin doctor Derek Draper that Mr Blair will resign as Labour leader, but stay on as PM, to suggestions that he will soon name a date for his departure – but one much further away than Mr Brown would accept. Truly, the rumour mill is now in full swing.

The latest arena for vituperation is over pensions. The Chancellor has resisted the recommendation made by Lord Adair Turner and the Pensions Commission that the state pension should once again be linked to the level of earnings, which would entail a huge increase in public money.

Restoring the link would be hugely popular with Labour MPs, since it was first broken under Mrs Thatcher and its restoration has been a left-wing demand ever since.

The Prime Minister has let it be known that he favours restoration.

Suddenly, a new battlefront has emerged which reveals that the fight between the Blairites and the Brownites is about far more than personalities. The truth is that it not only undermines the future of the Labour Party - which matters only to those who are part of the gravy train - but the good governance of the country itself.

Above all, Britain's future prosperity is at stake, and it is deeply worrying that critical decisions are being made in the context of a poisonous political fight - not on their intrinsic merits for the good of voters.

In the case of pensions, for instance, Mr Brown’s stance is entirely right
- restoring the link with earnings would be economically foolhardy and would destroy at a stroke any notion of good housekeeping. But because the Prime Minister is now searching for weapons to use against his Chancellor, he is throwing economic sense to the winds.

That is why this festering feud must now be resolved. Mr Blair is a busted flush, unable to pass the legislation he claims he is in office to secure.

The time has come for him to step aside and let Mr Brown get on with things his way - for good or ill.