Unions have claimed victory in a deal with the prime minister over public sector workers whose contracts are taken over by private firms.

The deal over "two-tier workers" on the eve of Labour's spring conference in Glasgow angered employers - with the CBI accusing Tony Blair of "capitulating".

Forum Response: GMB

John Edmonds, general secretary of the GMB, said: "This agreement shows what can be achieved for British workers when trade unions and the government work together. It provides protection for public service workers from contractors that would cut their terms and conditions to boost their profits.

"I trust that this will be the beginning of new relations between the government and the trade unions."

Forum Response: Institute of Directors

A spokesman for the IoD told ePolitix.com:"This decision does seem to go against the government's commitment to public service reform. To achieve real improvements in the public sector employers need a flexible workforce."