* New leader has hinted could water down plan to cut deficit
* Party must stay in centre ground, ex-finance minister says
(Adds IMF, finance minister comment, edits)
By Adrian Croft
MANCHESTER, England, Sept 27 (Reuters) - Britain's new opposition leader Ed Miliband was urged on Monday to put forward realistic and credible plans to cut the budget deficit or risk another election defeat for his Labour Party.
Alistair Darling, Labour finance minister until the party lost power in May to a Conservative-Liberal Democrat coalition, delivered the warning to a party conference two days after Miliband, 40, was elected as leader.
"People know there is a deficit. They know it needs to come down. And if you deny that, frankly people will not listen to you, they will walk away and it will have a disastrous consequence (at the next election)," Darling said.
The left-leaning Miliband, who won a tight leadership contest thanks to trade union support, has said Darling's plan to halve Britain's record peacetime budget deficit in four years is a "starting point" that could be improved by, for example, raising taxes on banks.
Labour's policy was already less ambitious than the coalition government's plans to slash public spending to almost eliminate the deficit, equivalent to 11 percent of Gross Domestic Product, by the time of the next election in 2015.
Miliband has attacked those plans as "economically dangerous" and said he backs "cautious" spending cuts.
Darling, who led the Labour government's response to the financial crisis but is about to step down as Labour's finance spokesman, said any new deficit-cutting plan must be credible.
"It's got to strike a chord with millions of ordinary people as being realistic and credible," Darling told Labour's annual conference in the northwestern city of Manchester.
Labour must stay in the centre ground of British politics, Darling said.
UNION BACKING
Miliband's older brother David had been the favourite the leadership contest triggered when Gordon Brown stepped down after the May election that ended his three-year premiership and Labour's 13 years in power.
David Miliband was widely seen as heir to former prime minister Tony Blair, whose centrist, business-friendly "New Labour" won three consecutive elections.
Unions hope Ed Miliband's victory will give them a powerful ally in their fight against the Conservative-Liberal Democrat coalition's cuts, which could lead to thousands of their members being thrown out of work. They are threatening coordinated strikes.
The International Monetary Fund threw its weight behind the coalition's planned spending cuts on Monday. [ID:nLDE68Q1RB]
The coalition's Conservative finance minister, George Osborne, said the "thumbs-up" from the IMF presented the new Labour leader with a very serious choice.
"Either he listens to what the IMF is saying ... or he sticks with the position that the trade union backers of his election campaign seem to want him to do, which is to tear up these deficit plans," Osborne told the BBC.
"If we listened to that advice, we would be plunging the British economy back into crisis," he said.
Miliband, who is due to give his centrepiece speech to the conference on Tuesday, denied on Sunday his victory represented a "lurch to the left" or that he would be a stooge of the unions, but he declared that the era of New Labour was over.
The Conservatives say there is a black hole of 67 billion pounds ($106 billion) in the spending plans Miliband announced during his leadership campaign.
International bank Citi said Miliband's victory meant there was unlikely to be a broad consensus across Britain's major parties on the need for sizeable early fiscal tightening.
"Miliband's victory tends to take Labour further away from the political centre ground on which most UK elections are won," it said in a research note.
David Miliband has not yet said whether he will serve under his brother, but urged the party on Monday to unite behind the new leader and to stamp out cliques and factions.
(Editing by Mark Trevelyan)