The issue is affirmative action, America's system of certain preferences in employment and college admissions for people of colour and women, which dates back to 1965. While its salience is dwarfed in public opinion polls by larger questions like Iraq and the economy, racial preferences have potent symbolic value and present a potential minefield for America's first black presidential nominee. Conservatives are hoping to place anti-affirmative action initiatives on the ballot in three states in November—Colorado, Nebraska and Arizona—so Obama will have trouble avoiding the issue.

Fortunately, Obama has hinted that he may be ready to make a shift on the policy—which is the right thing to do on the merits and on the politics. He has traditionally been a strong supporter of affirmative action, campaigning against a ban on racial preferences in Michigan in 2006. But more recently, he has suggested that he may be willing to embrace preferences for low-income Americans of all races instead. How he handles this question could have enormous implications for his candidacy.

Unlike racially-tinged issues—such as welfare and crime—affirmative action is especially dicey because it is unmistakably and by definition about race. Moreover, unlike welfare and crime, which Bill Clinton largely defused politically, Democrats never shifted to the middle on racial preferences, Clinton's "mend it, don't end it" rhetoric notwithstanding. This is problematic for any Democratic candidate since Americans oppose racial preferences by two-to-one, but it may be particularly treacherous territory for an African American candidate whom Republicans will try to paint as out of touch with working-class whites.

Twice during the primary campaign, Obama has been asked by George Stephanopoulos, who handled a review of affirmative action policies for President Clinton, whether or not he believed his own fairly privileged daughters deserve affirmative action preferences in college. Both times he answered no.

Saying the opposite—"Yes, my daughters have it worse than poor white kids in Appalachia"—would have been politically disastrous. Obama then went further to say that low income and working class people of all colours deserve special consideration. This policy happens to garner strong public support: the same respondents who oppose racial preferences by two-to-one support income-based preferences by the same ratio.

Championing a leg-up for low-income and working-class people—and denying them to privileged people—runs sharply against the orthodoxy of the party and the position of civil rights groups, who have said affirmative action should be for racial minorities of even the most privileged economic status. Indeed, means-testing affirmative action would represent a dramatic departure from current practices at selective universities and colleges. According to a study of elite schools by William Bowen and Derek Bok, strong supporters of affirmative action, 86% of African American students are from middle-income or wealthy families.

Providing a leg up to low-income students would represent an enormous change. In a recent study, Bowen found that within a given standardised test range, being an under-represented minority increases the chance of admissions by 28 percentage points but being poor makes no difference one way or the other. Tellingly, the University of Chicago admissions director told The Wall Street Journal that he would give Obama's daughters an admissions "break" because "those children, for all their privileges, will have interesting things to say about American society...."

When Bill Clinton suggested a similar shift from race to class-based affirmative action in 1995, civil rights and women's groups erupted and Clinton quickly shelved the idea. But as an African American candidate, with enthusiastic black support, Obama has special credibility to shift away from existing policy and to assure minorities that they will do well under the new program.

If properly structured, class-based affirmative action can produce substantial racial diversity, given the overlap between race and class in American society. A 2004 Century Foundation study, conducted by Anthony Carnevale and Stephen Rose, found that providing preferences based on parental income, education and occupation, and the socioeconomic status of the high school attended, would boost black and Latino admissions from 4% (under an admissions system of grades and test scores) to 10% at the nation's most selective colleges and universities, slightly below the current 12% representation under a system of racial affirmative action.

Using additional factors not included in the Century Foundation study, however, would produce an even bigger racial dividend. Because of slavery, segregation and housing discrimination, the black-white gap in accumulated wealth is much larger than black-white income gap. Black net worth is about 10% of white net worth, while black income is about 60% of white income. Using net worth in a class-based affirmative action program is both the right thing to do (coming from a family having little or negative worth is an obstacle to doing well academically) and also boosts racial diversity substantially. Employing other factors, like growing up in an area with concentrated poverty (which blacks are much more likely to do than whites of the same income) would also boost the racial dividend of economic affirmative action.

Just to be sure, however, Obama could call for a transition period from race-based to class-based affirmative action, during which time minority representation would be held harmless. And he could require conservatives to give a guarantee of support for more federal college aid before any switch occurs.

While abandoning affirmative action altogether would repudiate liberal concern for the underdog, replacing it with class-based programs would pick up a lost thread of thought articulated by liberal heroes like Martin Luther King and Robert F Kennedy. In his 1964 book Why We Can't Wait, King argued something had to be done to address 300 years of discrimination, but instead of proposing a Bill of Rights for Blacks, he proposed a Bill of Rights for the Disadvantaged, saying: "While Negroes form the vast majority of America's disadvantaged, there are millions of white poor who would also benefit from such a bill."

Robert Kennedy, too, rejected racial preferences—and told journalist Jack Newfield, "I've come to the conclusion that poverty is closer to the root of the problem than colour."

Moreover, the class-based approach would be consistent with the larger brilliance of Obama's campaign—that it is time to "turn the page," to move beyond past disputes, and come together as "one people" to solve our common problems. Supporting class-based affirmative action would reassure working-class whites that the candidate whom Republicans are trying to paint as an out of touch elitist who attended a radical black church in fact cares deeply about the predicament of all working Americans.

And it might just help solve the central riddle that has bedevilled Democratic presidential candidates for four decades—why the party of working people has such trouble attracting working-class whites—restoring a potent coalition of blacks and working class whites that is essential to bringing about real change.

Richard D. Kahlenberg is a Senior Fellow at The Century Foundation. This article was published in The Guardian Unlimited.