A report published by a centre-left think-tank has fuelled the growing row over Labour's plans to involve the private sector in public service provision.

The report by the Institute for Public Policy Research's commission also fires a shot across Downing Street's bows with a harsh warning that Blair's ambitions for world-class services may be hampered by flaws in the private finance initiative (PFI).

There is "no coherent rationale" for deciding which services should involve the private sector, says the report. It is also critcal of government plans for the London Underground and air traffic control.

"The record of PFI has been patchy," the report adds.

Nearly three hundred pages long and involving up-and-coming Labour MP, Ruth Kelly, recently appointed to the Treasury, the study on public private partnerships has already been widely leaked, sparking bitter disputes between public sector unions and some Labour MPs horrified at Tony Blair's second term flagship of public service reform.