Tony Blair is heading for a conference showdown with union leaders over private sector involvement in public services.

The two camps were left in no doubt about each other's position after a two-hour meeting at Downing Street.

Britain's biggest unions told Mr Blair they would resist any plans to "privatise" hospitals or schools.

A GMB spokesman said unions were on a "collision course" for a row with Labour at this autumn's annual party conference.

He said: "We hope we can resolve this issue through negotiation but if that is not possible we will have no choice but to settle it on the floor of the Labour Party conference."

TUC general secretary John Monks was more conciliatory.

He said: "He Mr Blair clearly recognises the importance of winning the support of public sector staff in any programme to improve services."

Roger Lyons, general secretary of the Manufacturing Science and Finance union, said the meeting had brought the two sides "much closer together".

A Downing Street spokesman insisted it was a fruitful meeting.

He said: "There was agreement that we are not talking about privatisation.

"There was also agreement that both the Government and unions place great value on the people who staff public services."

Updated: 12.01 Thursday, June 28