Gordon Brown and Stephen Byers are at loggerheads over plans by the Secretary of State for Transport, Local Government and the Regions to ban commercial firms from having access to the electoral register.
The Treasury is alarmed that the move will seriously undermine the Chancellor's efforts to clamp down on money- laundering by criminals and terrorists – a priority of Mr Brown's in the wake of 11 September.
Banks, credit rating agencies and the police use the electoral register to verify the identity of people opening bank accounts or applying for credit. However, a court ruling last Friday has put the right of commercial organisations to have access to the electoral register in severe doubt.
Mr Justice Kay ruled that a council taxpayer in Wakefield was justified in refusing to complete the electoral register because it would be an infringement of data protection laws and the Human Rights Convention for his details to be then passed on to private organisations for commercial gain.
Following the ruling the Electoral Commission advised all local authorities to stop supplying their registers to commercial organisations while it consulted with Mr Byers's department.
The commission needs to issue permanent guidance before the new register is published on 1 December and it is understood the view of the Department for Transport, Local Government and the Regions (DTLR) is that, to avoid any further legal challenges, the ban should be made indefinite until new legislation is introduced.
The commission was due to publish the guidance on its website today but after frantic discussions in Whitehall, an announcement has been delayed. The Treasury is understood to have been alerted to the problem after being contacted by several banks.
Whitehall sources say that Mr Byers is minded to go ahead with a ban but the Treasury is vigorously resisting such a move.
In theory, the court ruling does not affect the right of the police to access the electoral register. In practice, however, they rely upon credit-rating agencies to provide the information to them. If the ban on use of the register by all but public bodies remains in place, then a further unintended consequence may be that political parties are denied access to it for canvassing purposes.
A spokeswoman for the commission said: "We are consulting with all parties and hope to issue guidance next week. I do not think we would recommend a blanket ban because that would not be practical but no decision has yet been taken."
Barry Conroy, a director of Equifax, one of Britain's two leading credit-checking agencies, said: "Access to the register is fundamental to clamping down on money-laundering and only organisations like ours can deliver the data speedily. We are making a plea for a little more joined-up thinking in the Government."
The Representation of the People Act passed last year contains provisions allowing banks and credit agencies to have continued access to the full electoral register. But the Government has never brought forward the necessary legislation and there are doubts about how easy it will be to do so now in light of the court ruling.