The Scottish National Party (SNP) made the attack after Jack McConnell pledged to create a back-up fund from which money will be released for public private partnerships (PPPs).

He said that councils who oppose private finance schemes will be able to claim a share of the cash for building projects - if they change their stance.

The SNP said the move showed that Labour is "running scared" of its alternative funding policy of not-for-profit trusts.

I would seriously question whether this bully boy approach is the best way to persuade local councils to make full use of their potential

Scots Tory leader, David McLetchie

Mr McConnell's comments came during a visit to the National Waiting Times Centre in Clydebank - formerly the HCI Hospital.

He said the Scottish Executive would keep back cash due to be allocated for improving school buildings in case any councils changed their minds.

When asked about the decision to freeze handouts under the School Building Improvement Programme, Mr McConnell denied he was trying to coerce opposition councils into accepting PPPs.

He said: "We're not holding back money from councils, we're making money available to councils.

"You can see in Glasgow and other parts of Scotland the fantastic benefits that have come through the programme in improving education for Scotland as a whole.

Council 'bribe'

"I think it's an absolute tragedy that some councils, for party political reasons, are choosing not to take part in this important national programme.

"They have a right to do that, but if their successors change their minds we will make sure that local people don't lose out."

The SNP described the move as a "bribe" to councils which opposed private involvement in public sector projects.

Alasdair Morgan: "Running scared"

The party's finance spokesman, Alasdair Morgan, said: "Jack McConnell is holding back money for public building projects so he can pursue his discredited privatisation scheme - a scheme which takes money out of public services and stuffs it into the pockets of private financiers.

"This is a clear indication that Labour are running scared of the SNP policy of not for profit trusts, which provide funds for public services at lower costs."

Scottish Conservative leader David McLetchie also accused the first minister of "political arm-twisting" and being a "bully boy".

He said: "Whilst I am delighted that Labour has dropped its original opposition to PFI (Private Finance Initiative), I would seriously question whether this bully boy approach is the best way to persuade local councils to make full use of their potential.

"Whilst I strongly support PFI schemes, I also believe that local government should be at liberty to make, and face the electoral consequences of its own mistakes."