It comes as an unpublished report commissioned by Labour to analyse its defeat at the general election suggests the party may be heading in the wrong direction under Mr Corbyn's leadership if it wants to be re-elected.
The report, obtained by ITV's Robert Peston, warned that "Labour negatives are deep and powerful".
It said that the party would need to "be for middle class voters, not just down and outs" as well "atone for its past".
The call for a return to centre-ground politics comes from focus-group discussions with former Labour supporters who voted Conservative in England and SNP in Scotland.
The 'Emerging from the Darkness' report, commissioned by former acting leader Harriet Harman and written by Deborah Mattinson and her Britainthinks polling consultancy, warned that swing voters see the party as "nice" but "in thrall to the undeserving", whilst being "in denial" about its "appalling" economic record.
Mr Dugher said the Labour leader "faces a big test" in the May elections. He said: "We need to win in London but we have got to show we can make big gains in the rest of England as well and we have got to hold on to power in Wales."
He warned Mr Corbyn must show he can turn his huge Labour mandate into "real support" from voters.
"It's not rocket science. At the most basic level if they think you are out of touch on immigration and welfare, you had better start talking about immigration and welfare. That would be a good start."
Labour must "stop picking fights with itself", he added.
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