The government is planning to cut council workers' pensions if they retire before the age of 65.

John Prescott is going to lift the minimum retirement age for council staff from 50 to 55 and end the rule that allows some workers to retire on full pensions from the age of 55, based on their final salary.

The changes are backed by local government employers who point out that councils are facing a £12 billion deficit in pension funds because of stock market falls.

Prescott, meanwhile, has denied reports that he is planning to step down from the Cabinet at the next election.