The government was yesterday hit by claims that it was set to dump plans to tackle "two-tier" workforces.

As Tony Blair launched a pamphlet aimed at public sector workers, unions hit out after it was claimed that ministers were backtracking on commitments to give all employees equal pay and conditions.

Downing Street dismissed claims that Blair's 30-page glossy brochure was merely a "propaganda" exercise.

The CBI has let it be known that new employees should not have the same terms and conditions as existing employees, although trade unions said the matter could become "the defining issue" in their relations with the government.

Unions also expressed alarm at suggestions that ministers were preparing to backtrack on a commitment to ensure that the pensions of staff transferred from the public to the private sector are secured.