The health secretary, Patricia Hewitt, has retreated on plans to "privatise" 250,000 NHS nurses and other medical staff in the face of resistance by Labour MPs, unions and health-service professionals.
An urgent rethink was forced on the government after Tony Blair got a whiff of MPs' anger as he was accused of "dogma" and "ideology" during Commons question time this week and there were private complaints to No 10 and Ms Hewitt. Downing Street is anxious to avoid yet another row over Mr Blair's drive for more radical public service reform.
Ministers have already pulled back from another fight this week when they dropped plans to make public sector workers work until 65 to help ease the pension funding crisis. The simmering health revolt among MPs was discussed in yesterday's weekly cabinet meeting.
"Patricia got a rough ride when she met MPs this week. The ice is cracking; I think they're going to do the sensible thing," one senior Labour MP predicted last night.
An ally said: "She's in listening mode. She knows you can't make a reform work unless staff and politicians are with you." Ms Hewitt has already privately apologised for mishandling the original policy statement. She is expected to modify her July paper, Commissioning a Patient-Led NHS, to make it "less prescriptive" and less sweeping.
The planned merger of many of the NHS's 300 primary care trusts, which commission health spending and provide direct non-hospital services, will continue in the hope of saving up to £250m a year in management costs and making them more effective. But Ms Hewitt will no longer insist that the trusts stop directly employing the people who staff and manage chiropody, physiotherapy, speech therapy and other services.
Under the plan, which many MPs regard as having been "slipped out" after they went on holiday in July, the 250,000 staff would have been transferred to other bodies including GP partnerships, mutual organisations and private sector employers.
It caused alarm and puzzlement at local level, where the NHS has been struggling with waves of reforms. Even Blairite MPs who believe in giving the private sector a bigger role in providing free NHS services were alarmed.
When MPs returned to Westminster last week after voicing initial alarm at Labour's Blackpool conference, Ms Hewitt, who prides herself on consultation processes, was roughed up in a series of "political surgeries" with backbenchers.
Mr Blair also got the message when he had his weekly meeting with Labour's backbench parliamentary committee on Wednesday. Some MPs blame him for putting too much pressure on Ms Hewitt; others say that she was too keen to push No 10's agenda "to prove herself".
"Ruth Kelly stood up against some of the nonsense coming out of Downing St, Patricia didn't," said another MP.
