Stephen Byers, a former British cabinet minister who remains close to Prime Minister Tony Blair, appealed on Sunday for the inheritance tax to be scrapped.
The Byers appeal in The Sunday Telegraph was viewed by the newspaper as a political bomb detonated under Blair's likely successor finance minister Gordon Brown, who it believes would oppose such a move.
"Inheritance tax should be abolished," wrote Byers, a former transport secretary.
Byers said the controversial tax, levied on all estates worth more than 285,000 pounds (418,000 euros or 536,000 dollars), was "a penalty on hard work, thrift and enterprise."
He warned that soaring house prices threatened to bring millions more within the "net" of inheritance tax, which was designed to target the very wealthy rather than ordinary families.
Scrapping inheritance tax would enable Blair's successor to show that New Labour's middle class electors had not been forgotten, he added.
"We know that Tony Blair will stand down at some stage before the next election," he wrote.
"The danger for Labour in electoral terms has always been that when he departs from Downing Street voters will feel that the pragmatic and modernising approach of New Labour has gone with him.
"The challenge for his successor is to demonstrate that this is not the case and to show that they are in touch with the British people.
The abolition of inheritance tax "would show that New Labour is prepared to look again at the tax system to ensure that it is grounded in fairness and reflects the modern world in which we live," he said.
Byers also suggested rises in "green" taxes to fund the move. The Treasury estimates that inheritance tax will raise 3.6 billion pounds in the current financial year.
The number of people who have been forced to pay inheritance tax has more than doubled since 1997, leading to charges that the government has used it as a "stealth" tax.
Some 37,000 paid the tax last year, up from 18,000 in the year Labour came to power, according to government figures.
A spokesperson at Brown's department of the treasury insisted that inheritance tax was "fair" and that an 18 pence increase on gasoline duty would be necessary to plug the gap left by its abolition.
A Treasury source played down Byers' importance, dismissing him as a junior member of parliament.