His comments in an interview with the weekly L'Obs came as rifts plaguing the Socialist party once again leapt to the fore with ousted ministers and allies of embattled President Francois Hollande engaging in a public war of words via competing radio and TV interviews.
The spat centred on the abstention by a group of rebel Socialist lawmakers that includes the former education, culture and environment ministers, on a key parliamentary vote on France's 2015 budget, which nevertheless went through with a razor thin majority.
Hollande has been unable to stem increasingly strident dissent within his camp despite two cabinet reshuffles, as the hard-core rump on the left of the party continues to condemn the government's reformist, pro-business stance as a lurch to the right that will not end a dire economic crisis.
"We must put a stop to the backward-looking left that has become attached to a bygone and nostalgic past," Valls said in his interview with L'Obs, due out on Thursday but seen by AFP Wednesday.
"If the left does not reinvent itself... it could die," he warned.
"The left that gives up on reforming, that chooses to defend yesterday's solutions rather than resolve today's problems - that left is picking the wrong fight."
Calling on all "progressive forces" in the country to put their differences aside and gather as one to drag France out of its economic quagmire, he said.
"We must soon create a... federation or one group" of these forces, without detailing who they would be.
In his interview, Valls acknowledged that bad choices were made at the beginning of Hollande's presidency in 2012.
"We favoured tax (rises) over a drop in public spending," he said, reiterating his belief in the new direction the government was taking.
Valls also warned that if the left failed to reform and yield results, the far-right would be the clear winner, as witnessed already with the National Front party's good results at local and European elections earlier this year.
Valls and Hollande have been sharply criticised by many on the left of the Socialist party for their decision to implement huge cuts in public spending and give companies tax breaks in return for a pledge to create jobs.
Chief among critics who see this as a form of austerity is former economy minister Arnaud Montebourg, whose public dissent saw him kicked out of the government in an August emergency reshuffle and replaced by former investment banker Emmanuel Macron.
Former education and culture ministers Benoit Hamon and Aurelie Filippetti followed him out the door but remained MPs, and they were part of the group that abstained on the budget vote on Tuesday.
The move prompted angry criticism Wednesday from Jean-Christophe Cambadelis, Socialist party chief, who told RTL radio he was "shocked."
He said their abstention "posed an ethical problem", pointing out that they had both approved part of the budget during a July cabinet meeting when they were still ministers.
Government spokesman Stephane Le Foll, meanwhile, said they had "neglected their duties", as had former environment and energy minister Delphine Batho, who also abstained.
Quick to react, Filippetti told i-TELE that she had "no lessons to receive from anyone," accusing Cambadelis of being "slightly dishonest".
Hamon went a step further, saying the government's current reformist, pro-business stance "threatens the republic" and would play in the hands of the far-right in the 2017 presidential elections as the French despair of ever seeing an end to the economic crisis.
The government has been unable to stem sky-high unemployment and kickstart growth. The eurozone's second-biggest economy has also admitted it will be unable to get its ballooning budget deficit below the EU ceiling until 2017 - two years later than promised.
Hamon warned on RFI radio that the threat was "not only that (far-right leader) Marine Le Pen would get to the second round of elections without any resistance, but also... that soon, she will lead the country".