Cash could be given directly to the elderly to buy social services under plans being considered by Labour.

The party’s policy and election strategist Alan Milburn is considering allowing pensioners and others to opt out of local authority provision.

Instead, they could chose to pay private firms for anything from meals-on-wheels to free transport and long-term care.

If adopted the plan would be an extension of the party’s ambition to promote "choice" for public service users.

However campaigners said the move would merely confuse elderly people and create more red tape.

Andrea Lane, of Help the Aged said: "It could make life more inconvenient for the most vulnerable in society".

In a bid to allay those fears the government say they would allow the elderly to opt out of the scheme

The policy would also set a determinedly Blairite New Labour stamp on a third term and be opposed by deputy prime minister John Prescott and the chancellor Gordon Brown.

According to the Sunday Telegraph neither man has been invited to meetings discussing the plan.