Tony Blair does not want to lead a new centre-ground party "at this or any stage", he has told BBC Radio 4's Today programme.
The former prime minister said there was a "vast uncultivated centre ground" in British politics.
And, he said, the Tony Blair Institute for Global Change think-tank was drawing up policies that could be used by a new political movement.
But he insisted he was not involved in talks about forming a new a party.
It comes amid press speculation about Labour MPs disillusioned with the direction of the party under Jeremy Corbyn forming a breakaway party and reports such a group would have access to £50m in private cash.
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The Labour leadership has been quick to pour scorn on the idea, with Shadow Chancellor John McDonnell calling it "a party of the rich, by the rich, for the rich".
Many on Labour's left blame the SDP – a new centre-ground party that broke away from Labour in the early 1980s – for splitting the Labour vote and keeping Margaret Thatcher's Conservative Party in power.
Tony Blair argued that the two main parties had to realise that if they continued on their current paths it was inevitable that someone would seek to occupy the vacant centre ground in British politics.
He said the Conservative Party was "increasingly defined by Brexit and engages in a narrow-minded nationalism" while Labour was "increasingly in the grip of the far left" and, he claimed, this did not reflect the views of millions of voters.
"There is a constituency in this country which is socially liberal, in favour of strong methods of social justice but also believes in a well-run, properly run, enterprising economy," he told Today.
He said his think-tank was "putting together a policy platform that would form, if you like, policies that anyone in politics could take" based around the idea that "globalisation is essentially a good thing, not a bad thing, but its risks have to be mitigated".
He agreed that it was not a big leap from what he was doing at his institute to forming a new political movement, but added: "That's not what I am engaged in. I am not organising. I am not the right person to do that."
Asked if that was because his name was politically toxic, he said: "That's possibly true."
Mr Blair, who was prime minister between 1997 and 2007, and remains a member of the Labour Party, said "starting a new political party is incredibly difficult".
But he added: "We have got an old fashioned Conservative Party and a Labour Party that's got, frankly, reheated politics from the days I remember as a student.
"And I don't think either of those things answer the challenges of the country."