The privatisation of public services should be "extended, not retracted" according to centre-left thinktank Progress.
The findings show debate on the centre-left of the Labour party remains firmly committed to Blairite reform of public services, coming as they do from a group of Labour party members dedicated to "radical and progressive politics".
Alan Milburn, former health secretary and chair of the panel which drew up the paper, said: "New Labour has rightly made a managed form of competition a reality in mainstream public services.
"Of course there are services where competition is inappropriate but where it can be applied it gives organisations a sharp reason to focus on delivering better services to users.
"That is why there should be a level playing field where public, private and voluntary sectors are able to compete to be providers."
Other proposals include reducing the role of central government in public services and even capping the scale and scope of its interference in the day-to-day running of the services.
Police officers should be elected, the paper says, and local services such as GPs, colleges and jobcentres should be subjected to ten-year renewable franchises with poor performance acting as a trigger for automatic re-franchising.
The debate between the left and right of the Labour party has intensified since its crushing local election showings and defeat at the Crewe and Nantwich by-election.
In one of the most important battles, unions and Labour left wingers, who generally oppose the involvement of private companies in public services, are urging the government to back down on a public sector pay policy which they say fails to consider the increased cost of commodities.
The Progress paper does make one concession to this group, saying national pay awards should be kept in line "with cost of living increases".
But it made no concessions on the issue of public services, with Mr Milburn saying: "It is not slowing down on reform that will best realise our values. It is speeding up."