Mr Blair believes PR could boost his campaign to "clean up" town halls by ending "one-party states" where Labour councillors have been accused of corruption and waste.
But Mr Prescott thinks PR would create an unstoppable momentum for it to be brought in for general elections. The split may force Mr Blair to delay his plan until after the general election. Instead, they will seek to "modernise" local government by urging councils to allow voters to elect mayors.
Downing Street aides believe PR would also encourage a higher turn-out. Polling in most areas outside London is on 6 May. Only one person in five might vote in some places.
Launching Labour's campaign yesterday, ministers said they would not continue to tolerate such low turn-outs.
Hilary Armstrong, Minister for Local Government, said: "No responsible government can live with a situation where billions of pounds of taxpayers' money is handed out by councils with such limited mandates." But she sided with Mr Prescott over the introduction of PR, saying she did not believe it was the "secret answer" to problems in town halls.
Ministers fear sleaze claims against some Labour authorities will harm its prospects next month. The Tories are making sleaze a central plank in their campaign.Reuse content