Richard Painter, chairman of the improvement team sent into Hackney by the Government, last night rejected suggestions that he would resign. But he is, however, asking for meetings with both government and council officials, after Stephen Byers, the school standards minister, welcomed the council education committee's "positive response".
The present row is over the appointment of a director of education, a post which has been unfilled for nearly two years. Mr Painter wants the director to be responsible for all aspects of education to ensure that the job goes to a first-class candidate.
Tony Elliston, the council's chief executive, and councillors want the director to be in charge only of schools. A separate executive director would have responsibility for consumer services and construction.
The committee did make some concessions to the improvement team by agreeing to upgrade the director of schools post and offer the salary suggested by Mr Painter. Earlier this week, Mr Painter said that he would ask ministers to intervene unless the council accepted his report by next Thursday.
Before Wednesday night's meeting, official Labour councillors in Hackney were also backing Mr Painter's team. Mr Byers' intervention is understood to have led to their decision to support rebel Labour, Conservative and Liberals in opposing the team's proposals.
Mark Lushington of the Hackney Teachers' Association said there had been a stitch-up. "Ministers have caved in to the local politicians ... this government is supposed to be about education, education, not politics, politics."
A Department for Education spokesman said the Government had not backed down. "We asked for someone to head the education service in Hackney and the council has agreed to that."
The improvement team was invited into Hackney after an inspectors' report said the education service was "in disarray."
But Mr Painter said they did not go far enough. "My team is very unhappy about this. They are all pretty upset."