Tony Blair used his monthly press conference yesterday to confirm that a Cabinet reshuffle will happen "by the end of the week".

His comments followed the resignation of Andrew Smith and came amid growing speculation of an escalation in the feud between the prime minister and the chancellor.

Gordon Brown is said to be blocking the prime minister's attempt to install former health secretary Alan Milburn as party chairman.

The move would also alienate John Prescott, who remains a strong supporter of current chairman Ian McCartney.

McCartney comes out fighting today in an interview with the Guardian.

He said: "As I travel the country one of the most common complaints of party members is that they feel their hard work on the doorstep is often undermined by ill-discipline and briefing within the Westminster village."

Rejecting the criticism of himself, he said: "When you're basically described, and the best way of paraphrasing, as an inarticulate working class man from Glasgow who's very liked but ain't that much good, you know it's a caricature too far."

Friends of Milburn meanwhile have told the Times that Blair was faced with a defining choice.

"This is high stakes. It is all about the shape of the next government," one said.

Asked at his press conference why the chancellor appeared to have a veto over appointments to some departments Blair replied: "No, he doesn't. Neither does anyone else. That's the simple answer to that."

"In the end, you do this on the basis of ability and that's the way it should be done."