An act of parliament prevents police taking strike action.

Speaking on Sky News, Mr McNulty said it was "not the case" but admitted the government's spending review had put more pressure to save money overall.

The Mail on Sunday claims to have seen a memo to the home secretary from a top adviser, discussing the pay settlement.

It suggests counter-terrorism could suffer if more cash was spent on wages.

The newspaper reported that the leaked memo, entitled "Police Pay - The End Game" was written by Stephen Kershaw, director of Police Reform and Resources, on June 29 , 2007.

It is not as the paper says ... it is not as stark as that Police Minister Tony McNulty

Mr Kershaw is said to have told Home Secretary Jacqui Smith that some �50m of anti-terrorism funding could be at risk if police wages are not controlled.

He wrote that not controlling such costs: "... risks damaging our bid for significant extra money for counter-terrorism."

On Sky News, Mr McNulty said: "It is not as the paper says...it is not as stark as that.

"It was a factor and as it happens we did, I think, reasonably well in reopening things a little bit to get more funding for actually the police end of counter-terrorism."

He added that in the Comprehensive Spending Review, the Treasury would be looking at whether the Home Office was "playing our role in terms of Government-wide responsibilities on public sector pay".

'Cynical'

However, police unions and opposition parties have been quick to react to the newspaper's claims.

Police Federation chairman Jan Berry said today: "The memo proves how our members have been betrayed by this Government.

"It shows that the Government never had any intention of treating us fairly and give officers the confidence to protect the public without having to worry about their pay."

Shadow home secretary David Davis said: "From day one the government decided to behave in a cynical and underhand manner.

The Police Federation, which represents rank and file officers, is to ballot members on whether they want the right to strike, following a 2.5% pay deal.