Sadly we did not make any major progress on the specifics of their proposals

GMB spokesman

However, it emerged that some believed little real progress was made after one union warned they were all still on a "collision course" with the government.

Ministers are planning further meetings in an effort to reassure the unions over their plans for greater private involvement in the public sector, previously described by Downing Street as "non-negotiable".

'No punches pulled'

Speaking to reporters after Wednesday's dinner, TUC general secretary John Monks appeared to sum up the prevailing mood when he said: "No punches were pulled. The air was cleared."

He said a "degree of reassurance for all concerned" had been provided and added that they would "now work together to give the British people the public services they deserve".

There was agreement that we are not talking about privatisation

Downing Street spokesman

But later a spokesman for the GMB union gave a stark warning that they were still on a "collision course" for a row with Labour at the party's annual conference in the autumn.

"Sadly we did not make any major progress on the specifics of their proposals," he said.

"There was an attempt at general reassurance but there was nothing concrete to allay the fears of millions of public sector workers.

"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."

Conference threat

The issue will be raised again next week at the annual conference of the Transport and General Workers union.

Delegates are expected to reassert their strong opposition to the government's plans.

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

"We have major concerns about wholesale privatisation but as a result of these constructive discussions the prime minister made it clear there was no question of this happening," he said.

On the march: Bill Morris put his members' concerns

TGWU boss Bill Morris agreed: "We have taken advantage of the opportunity to express to the prime minister our concerns, our members' concerns, and he in turn has indicated to us that the government is about reform in the public sector and public services but there is no wholesale programme for mass privatisation as we've understood it in the historical context."

A Downing Street spokesman said it had been "a constructive meeting" and a "useful dialogue which will continue".

Mr Blair will be keen to avoid a fall-out with Labour's traditional backers, knowing that any reform he embarks on will have to take public sector workers with the government.

He has already moved to quiet fears among Labour MPs, warning them of public disillusionment if the government does not deliver on promised reforms in schools and hospitals.

Growing criticism

Among the growing barrage of criticism over government plans have been two left-leaning think tanks and a number of backbench Labour MPs.

Last week Unison, the main public sector union, fired a warning shot across Labour's bows by voting at its annual conference to conduct a review of its financial links to the party - currently worth �1.3m a year.

The Conservatives have not been slow to capitalise on the issue.

Outgoing Conservative leader William Hague mocked Mr Blair at Commons question time over "lurching from beer and sandwiches with the unions to canapes with the contractors".