Whitehall officials last night confirmed that three pilot projects - the key to a formula that will govern all 29 schemes under the private finance initiative (PFI) - have been held up while ministers try to thrash out a compromise between unions and potential contractors.
The news emerged as Unison, the biggest public sector union, threatened strike action if its members' interests are not protected.
Contractors poised to sign up to the pilot projects oppose the government's commitment to retain all staff, including cooks and porters, as NHS employees in what would be privately managed and financed hospitals.
The unexpected delay in signing the contracts for the three PFI hospitals - at Queen Mary's in Roehampton, south west London; Havering in east London; and Stoke Mandeville in Aylesbury, Buckinghamshire - underlined the depth of the government's difficulties in a political minefield where it is caught between two sides.
The unions have been suspicious since Labour's June election manifesto promised "no ideological barriers" to greater use of private sector skills, despite the manifesto also promising to find ways of ensuring that NHS staff would stay on the NHS payroll when supervised by private managers.
Details of how exactly to achieve that goal have become bogged down and the contracts delayed. "No construction has been halted, these are pre-contract discussions," said one health official.
"We're trying to make these pilot schemes work," a Unison spokesman stressed.
That controversy within Labour ranks is underlined by a Mori poll commissioned by the GMB general union. It found that 24% of Labour voters vow to desert the party at the next election if Mr Blair privatises key public services.
John Edmonds, GMB general secretary and a fierce critic of further privatisation, said: "Tony Blair threatens to crack the foundations of the Labour party. He has certainly tested the loyalty of Labour party members to destruction."
The TUC general secretary John Monks said he hoped for some "straight talking" from Mr Blair. Unions believed their honeymoon with the government was over.
With Mr Blair due to try to calm frayed nerves in a speech to the TUC conference in Brighton tomorrow, the trade and industry secretary Patricia Hewitt will today move to appease the unions by signalling concessions to their concerns to protect the rights - notably their occupational pensions - of workers who are transferred from the public to private employers and, increasingly, from one boss to another in private sector takeovers.
Ms Hewitt, yesterday stressed that the private sector would only play a "subsidiary partner" in education as the government sought to placate union leaders.
"Employees need reassurance that their rights will be safeguarded in the vital process of public sector reform and in business restructuring in the private sector," Ms Hewitt will tell delegates as she admits that "the government recognises that the existing regulations are not working as well as they might do."
Ms Hewitt's concession on pension rights was immediately welcomed as "a magnificent announcement" by Sir Ken Jackson, leader of the engineering union.
In the row over PFI hospitals - part of the wider public/private (PPP) plans of the Blair cabinet - unions believe the contractors are digging in because they realise that NHS pay rates may cut their profits.
Other sources say that discipline - how they manage staff hired by the NHS - is a more pressing worry for the private sector.
Dave Prentis, general secretary of Unison, said: "If the government reneges on these pilot schemes, I have no doubt whatsoever that our members will want our union to take industrial action on their behalf."
Sir Ken warned that thousands of construction jobs would be at risk as PFI had boosted investment in the public sector. "Someone put it to me the other day that the problem with the trade union movement is that you want to fight everybody in the pub at the same time," he said.
Privately, some ministers and Labour MPs are hoping that Mr Blair will realise just how disaffected the mood of trade unionist supporters and Labour voters is over the public finance initiative and public private partnerships.
