The government should safeguard pay for public sector workers when their jobs move to the private sector, a leading think tank has said.

In a report published on Monday, the Institute for Public Policy Research warned that without protecting pay and conditions, ministerial attempts to reform key public services would suffer.

Unions have warned that the "two-tier workforce" - where private employees are brought into public jobs on lower pay than existing staff - is a key part of their dispute with ministers.

The government has already reached such a deal with local government workers, ensuring that pay and conditions for new staff employed by the private sector are equivalent to those of existing public sector staff.

But the IPPR said that low paid workers would suffer unless the deal was extended further across the public sector.

And the think tank warned that low paid workers, especially women, would suffer the most from a failure to act.

"The stakes for not reaching an agreement are high," warned Paul Maltby of the IPPR.

"The local government deal - hammered earlier this year - demonstrates it is possible to achieve a balance between employee protection and management flexibility."

The report said that while the government did not need to duplicate the local government deal, it should stick to similar principles.

These included ending any incentive for firms to undercut rivals by cutting terms and conditions, and ensuring that overall no less favourable terms and conditions for new staff

Such a move would help to ensure that the public-private partnerships (PPS) being introduced by the government delivered high quality public services, said the IPPR.

"PPPs can result in high quality services and cost savings for the taxpayer," said Maltby.

"However, these cost savings should not, and need not, flow from the pockets of already low-paid workers.

"The two-year delay in resolving the two-tier workforce issue in local government has severely damaged the PPP debate.

"Any further government delays in providing a solution across central government could jeopardise other aspects of private sector involvement in public services and ultimately risk the government's entire public service reform agenda."