The dispute involves the Safety and Standards Directorate which sets rail safety policy and standards for the entire network.
The BR board has raised serious questions about the operation of the directorate when Railtrack is sold off.
The unit, originally part of BR, was transferred to Railtrack when the Government began its break-up of the publicly-owned rail network.
But until last year, when ministers announced that Railtrack was to be privatised, the industry had not expected the unit to be sold off in the near future.
Yesterday Labour called for the directorate - described by Railtrack as "the industry's directing mind on safety" - to be an independent entity.
Henry McLeish, Labour's rail spokesman, said: "The selling off of the Safety and Standards directorate would be reckless and irresponsible. It is clear the BR Board opposes this measure.
"We are looking on the Government to call a halt to privatisation and are asking the Health and Safety Executive to consider whether to have safety taken out of Railtrack to be an independent part of the Government."
The Opposition highlighted a section from a report compiled by the Health and Safety Commission in 1993 which argued: "Unless considerable care is taken to set up systems to ensure that new operators are properly equipped and organised there can be no confidence that risk will be effectively controlled right from the start and that important matters do not fall between the safety arrangements of the various parties.
"The consequences of failing to achieve adequate systems of control will be seen in increased risk on the railway system and the likelihood of an increase in the numbers, and possibly also the severity, of accidents."
Labour also believes there may be a conflict of interest arising from the position of David Rayner, who is director of Safety and Standards, and also a member of the main board of Railtrack.
A spokeswoman for Railtrack said yesterday: "The Safety and Standards Directorate is part of us and has been since we existed. As far as I am aware there has been no debate about it."
In recent weeks safety worries have been increased because of a spate of leaks. Two weeks ago a Railtrack document noted two incidents, including one which could have brought about a repeat of the Clapham disaster of 1988.
New extracts from the log of Railtrack's national incident room for 14 and 15 August reveal less serious problems with points at Heald Green south Junction.
Last week it emerged that Quality and Safety Services, which is part of BR's safety structure, is to be sold.Reuse content