By Nick Assinder BBC News Online political correspondent

Until yesterday the firefighters' dispute was about pay.

Now, thanks to John Prescott and his fire minister Nick Raynsford, it is about pay and, more significantly, jobs.

For the first time since this dispute started, the government has admitted that the strategic review of the fire service, which it believes is now essential, will look at staff numbers.

Prescott's comments caused concern

Nobody in government is mentioning any figure and Downing Street insists that just because 20% of the service is due for retirement over the next three years, it does not mean there will be 20% job losses.

The prime minister's official spokesman also insists that if the firefighters had not demanded a 40% pay rise the strategic review would not have been necessary.

He also, more quietly, admits there are issues that would have had to be dealt with anyway, irrespective of the pay claim.

Smell a rat

But the message is clear - the firefighters have brought all this on themselves through their outlandish pay demand.

The firefighters, understandably, see things rather differently. And they smell a rat.

On Tuesday, before John Prescott dropped his jobs bombshell, one of the FBU leaders told BBC News Online that he feared the government was going to use the looming retirements as an excuse to cut jobs.

If the FBU had feared that all along, and taken pre-emptive strike action in an attempt to boost their pay levels before the axe fell, then it was probably a miscalculation.

It has given the government an excuse to demand a fundamental staffing review and use the dispute as a smokescreen to cover job cuts.

There is, however, an alternative theory which is now gaining ground among some observers.

Dark forces

Ever since the beginning of this dispute it has been claimed that the government was spoiling for a fight with the firefighters.

Blair has hardened his tone

There were "dark forces" in Downing Street urging the prime minister to take on and crush the FBU.

And throughout the talks process there have been occasions when the government's approach has appeared bewildering.

The tone kept changing, there was talk of Mr Prescott vetoing deals almost without bothering to read them and then there was the prime minister's personal intervention which appeared designed to escalate the dispute.

For those who want to see that conspiracy, it is now there. And Mr Prescott has "let the cat out of the bag".

Serious backlash

Tony Blair had decided some time ago, the theory goes, that his cornerstone policy of modernising the public services was going to require job losses in the fire service.

The natural wastage offered by the looming retirements was a golden opportunity to do just that.

But a blunt announcement that the government was going to scrap thousands of jobs in the service would have risked a serious backlash, with the public backing the firefighters.

A strike over pay neatly shifted the landscape and gave the government the excuse it was looking for, say the sceptics.

It is a conspiracy theory and one that the prime minister takes great exception to.

Anyone who thinks he would deliberately engineer a firefighters strike at a time of heightened terrorist threat is, he insists, insulting.

But this is a conspiracy theory that is taking root.

And the fact that this has now turned into a battle over jobs makes the chances of a rapid resolution appear far less likely. Attitudes are hardening.