Blair in reshuffle battle

Tony Blair today confirmed he will reshuffle his Cabinet within days - and declared that Gordon Brown will have no veto over the changes.

The Prime Minister's comment came amid suggestions he will seize control of welfare reform from the Chancellor in the reshuffle, likely to come on Thursday or Friday. Asked at his monthly press conference why Mr Brown appeared to enjoy a veto over appointments to some departments, he replied: "No, he doesn't. Neither does anyone else, that's the simple answer to that."

With speculation of a purge of senior Brown allies from Cabinet, Mr Blair took the unusual step of revealing the timing of the changes. He said: "The reshuffle will not be today, it will be by the end of the week." In other remarks which appeared to play down the influence of the Chancellor, Mr Blair hailed government successes from the economy to school exam results as a team effort. "It's not me, it's not Gordon. It's myself, Gordon and the whole of the team." But he refused to comment on rumours that the reshuffle will install Blair loyalists into key positions and insisted the public could not care less about "Westminster village" gossip. The Prime Minister

was being urged by senior allies to appoint rising loyalist Alan Johnson as Work and Pensions Secretary to replace Andrew Smith who resigned last night.

Such a move would be seen as a major shot across the bows of the Chancellor, who has enjoyed total dominance from the Treasury over Labour's social and welfare policies for the past 10 years.

The Chancellor wrested command over "economic and social policy" in the infamous deal when he withdrew from the Labour leadership contest in 1994. Coming on top of the expected Cabinet return of Alan Milburn, the former Health Secretary tipped as a leadership rival to Mr Brown, ministers were predicting tensions between No 10 and the Treasury.

Mr Johnson pushed through plans for top-up fees against resistance from the Chancellor's camp. Allies of Mr Blair were making plain they believed welfare reform had run into the sand during Mr Smith's tenure and a tougher line on the workshy was needed.

Among ideas being tossed around in Whitehall was putting a time limit on people over 50 claiming incapacity benefit, a change Mr Smith opposed.

Mr Milburn is tipped to take a " significant" role in Labour's general election campaign, as government frontman and possibly campaign co-ordinator. Sources said he would attend Cabinet meetings but it was unclear if he would take the title of Labour chairman from Ian McCartney. Any sizeable role in election planning would put him at odds with Mr Brown who is campaign chairman.

Helen Jackson, a Labour MP and NEC member, warned that bringing back Mr Milburn would "destabilise" the party leadership before the general election.

Liberal Democrat leader Charles Kennedy today claimed the reshaping was being driven by a "divide at the top of government between the Brown supporters and the Blair supporters".

Mr Blair began mapping out his changes three months ago and is believed to have a clear idea of the new personnel. But he was also discussing the changes with deputy John Prescott and Mr Brown.

Mr Smith's announcement surprised No 10 and was widely seen as the minister jumping before he was pushed. Loyal to Mr Brown, there was speculation he might criticise the Government from the backbenches. His backbench aide, Ivan Henderson, said he would stay loyal.

Interviewed today, Mr Smith blamed the "demands" of balancing a Cabinet post with a marginal seat, saying: "I have chosen to leave the Government so I've got more time in my constituency."

That failed to prevent former ministers criticising what they claimed had been a "poisonous" whispering campaign against Mr Smith by Downing Street. Frank Field, the former minister for welfare reform, declared: "What is despicable is that this resignation comes against a background where No10 has been briefing against one of the members of the Cabinet."

Mr Field's comments mirror remarks by Nick Brown, but they will have more force coming from a once close ally of Mr Blair. Mr Blair listed incapacity benefit and housing benefit in his speech to Labour activists last week as priority areas for reforms.