Local government employers and the Fire Brigades Union have failed to reach agreement on pay in a move which could lead to fresh industrial unrest.

The FBU and local government employers had been expected to conclude discussions on their long-running pay dispute on Monday.

Both sides had been meeting for further talks with a final agreement thought likely.

But after the failure of the talks the FBU will now proceed with a ballot of members with a yes vote resulting in further strike dates being set.

Sir Sandy Bruce-Lockhart, Local Government Association chairman, said there had been "effective progress" during recent talks.

"We have now agreed and are ready to pay the outstanding 3.5 per cent backdated to last November, provided the FBU accepts normal working on bank holidays, for which fire fighters will receive double time and time off in lieu," he added.

"The final payment, 4.2 percent, of the three-part agreement will depend as it always has, on the latest independent verification by the Audit Commission.

"The report on this was received on Friday, and urgent consideration of it is underway as a preliminary review of it suggests that the results are mixed."

The talks had been hosted by the TUC, which has been aiming to broker a deal.

Assistant general secretary Kay Carberry said: "The TUC is extremely disappointed at the fire service national employers' failure to endorse the provisional agreement reached under the auspices of the TUC, between both sides' negotiators, which would have led to the conclusion of a long and bitter dispute.

"The TUC regrets that the employers' side included an unusually large number, including many who had not been involved in any of the previous negotiations."

Strikes

The dispute saw national strikes in 2002 and 2003, with the military being called in to provide cover.

But under the latest deal, fire fighters will receive a 3.5 per cent pay rise outstanding since last November and 4.2 per cent rise from the start of July.

Ahead of the talks, the FBU said an Audit Commission report on progress towards modernising the fire service should not delay the agreement.

The watchdog's findings were said to show that "significant progress is being made" in all but a handful of fire brigades in England and Wales, giving "green lights" to the pay award.

"The signals in all but a handful of brigades are very positive. The momentum of change is all in one direction and the pace of change is increasing," said FBU assistant general secretary Mike Fordham.

"This [Audit Commission] report is certainly no barrier to the pay awards being agreed on Monday. The vast majority of fire authorities are very pleased with these results.

"The key engines of change - local fire safety plans - are showing the highest numbers of green lights."

Fordham added that he would like to see faster progress in areas like part-time working, but said that the overall moves were "very, very positive".

"Now we have to start moving on from looking at process and start looking at hard results. That means creating a zero tolerance approach to fire deaths, which is what the public is more interested in," he added.