It has been a bad year for Mr Blair and his colleagues. New Labour's celebrated prowess at imagemaking and spin-doctoring has been severely dented since the Millennium Dome, that £1 billion symbol of the new Britain, began its career to a carping chorus from inside and outside the Labour party. More substantial damage has been done since then.
The Northern Ireland peace process is at unravelling point. The "ethical foreign policy" proclaimed by Mr Robin Cook has, in the minds of many Labour supporters, evaporated with the jet trails of Gen Pinochet's Santiago-bound plane. In Wales, Mr Alun Michael, the choice of Mr Blair for leadership of the assembly, has been replaced by Mr Rhodri Morgan.
The decision of Mr Ken Livingstone to run as an independent in the elections for London's mayor, is a far more serious threat - not only to Labour's image but its substance - than any of the other blows it has suffered. Not since the days when Labour devoured itself during the battle between Neil Kinnock and the Militant Tendency, has it faced such a serious crisis. New Labour is in grave danger of publicly disembowelling itself in the manner Old Labour frequently and, in the end fatally, did.
This challenge is the most significant yet to Mr Blair's leadership. The opinion polls and the London bookmakers point to a victory for Mr Livingstone over the official Labour candidate Mr Frank Dobson and Mr Steve Norris of the Tories. The loss of the mayoralty, with its limited powers, is something Mr Blair could live with, but the effect of the campaign on his party's fragile unity could have far more damaging consequences.
The Prime Minister's room for manoeuvre, however, is slim. The temptation for the Labour establishment to launch an all-out attack on Mr Livingstone will be extremely strong. The campaign is shaping up to be a dirty one. There are hints already that "revelations" about Mr Livingstone's private life may be made.
But moves of this nature could backfire. They may serve only to reinforce Mr Blair's growing image as a "control freak" and might also serve to open further rifts within the party. Mr Blair's easiest decision will be on dealing with MPs and other party officials who support Mr Livingstone's candidacy. Expulsion is the obvious course of action in this case.
Politicians are often masters of subtlety. One can expect equivocal statements from the backbenches which fall a little bit short of support for "Red Ken" but a long way short of support for Mr Dobson. Control of a party with an extremely large majority in parliament has never been easy at the best of times. In such cases the strongest opposition often comes from the government's own benches.
Up to now Mr Blair has been able to hold the reins and keep his party moving in the required direction. Keeping New Labour on track in the course of the campaign for the London mayoralty will provide a stern test for Mr Blair's political ability.