Labour is in the "worst of both worlds" on Brexit and will suffer at the ballot box, according to Tony Blair.
The former Labour prime minister said the party's position was not appealing to either Leave or Remain voters.
He claimed people now have a "greater understanding" of Brexit and that supporting another EU referendum would win over both sides.
Mr Blair is a leading pro-EU campaigner who wants to see the 2016 referendum reversed.
He has also been a persistent critic of Jeremy Corbyn's leadership.
Labour's position is that the 2016 Brexit vote should be respected, with no second referendum. The party says it would seek to protect jobs by agreeing a new customs union deal with the EU, but would not stay within the EU's single market which includes the free movement of people between countries.
Speaking on BBC Radio 4's Today programme, Mr Blair said Labour went into last year's general election with an "ambiguity" that served it well, adding: "I don't think it works any more today."
He claimed that "things have moved on since last year" and that people now realised that most EU migrants are "people we need".
Challenged that such arguments were aired at the time of the referendum, he said there was now a "greater understanding of the dilemma" of Brexit, adding that it was "pretty extraordinary" that Labour was trailing in the polls when the government was in "disarray".
"The Labour Party will pay a heavy price for the leadership's closet Euroscepticism," he wrote earlier in an article on the website of his Institute for Global Change.
"The tragedy is the price the country will pay for Labour's failure to lead."
Mr Blair said Labour should support keeping close ties to the EU to minimise economic damage, telling voters that "we've looked at this, everyone now understands it's much more complicated".
Leave supporters questioning the point of such a close relationship would then be given the chance to take the final decision in a referendum, he said.
Mr Blair claimed this would be a "winning strategy" which would mobilise Remain voters and "build a coalition" with Leave voters "who understand that ultimately they are still going to get the choice as to what happens".