The Cabinet is to consider a plan to hand millions of pounds of taxpayers' money to political parties to revive their withering grassroots organisations.
Tony Blair is preparing to override Tory objections to the state funding of political parties by including a pledge of state aid in Labour's manifesto at the next general election. If he retains power, it would be implemented swiftly. Previously, Mr Blair has suggested he would not press ahead without an all-party consensus, fearing a backlash from voters.
The change of strategy is revealed in an interview with The Independent today by Peter Hain, the Leader of the Commons. He chairs a new cabinet committee on electoral policy which is to draw up a policy on state funding. Although no figure has been set, some government advisers believe the move could result in about £30m a year being channelled into the parties.
Mr Hain said the Government would not wait for the Electoral Commission to produce its blueprint for state funding next summer but would work "in parallel" to it.
He said: "Politics needs political parties. Political parties can only run with money. Everyone agrees that it is not desirable to have parties relying on big donations from multinational companies, wealthy individuals or even trade unions."
The prospect of state funding will worry the unions as the TUC's annual conference in Brighton begins today. Some Blairites have long regarded state aid as a way of weakening the link between Labour and its union founders.
But Mr Hain insisted: "Trade unions, when they realise it is not a Trojan horse for breaking the link but strengthening the party organisation, will welcome this. The umbilical cord that links Labour to the trade unions is absolutely crucial."
He said he would not support a "trade off" under which state funding was accompanied by a cap on individual donations, perhaps £5,000. This is likely to be recommended by the Commission. Mr Hain said: "That is tantamount to an infringement of civil rights."
In the shorter term, the operation of Labour's election campaign was under threat as the party was warned by unions that there was no immediate prospect of a long-term funding deal. The party had called on unions to commit to £40m over five years, but the public service union Unison and the GMB general union failed to approve the package.
Mr Hain said the extra taxpayers' money would not be spent on expensive campaigns but policy development, research, political education, promoting citizenship and engagement with voters to boost the dwindling turnout at elections. He said that a new "political culture" needed to be organised and would not happen by itself.
In the short term, Labour's cash crisis will be eased by reported donations worth almost £10m secured by Lord Levy, the party's chief fund-raiser.