Blairites lined up for top jobs in reshuffle designed to strengthen Prime Minister

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The Prime Minister plans a major reshuffle - possibly before Christmas - to install leading Blairites in central positions and is driving forward plans to expand the hugely controversial programmes of foundation hospitals and city academies, according to Anthony Seldon.

Seldon claimed Mr Blair regarded Charles Clarke, the Home Secretary, as "too tame" and wanted to drive forward reform of the police by using league tables and performance targets for forces.

Writing in The Sunday Times, and quoting Mr Blair's "closest aides", Seldon said Mr Blair had been revitalised after a string of successes since the election, including London's victorious bid for the 2012 Olympics and the deal on aid for Africa at the Gleneagles G8 summit.

He quoted an adviser as saying "within six months he will stamp his new political capital on Whitehall. Young Blairites will be moved to important junior ministerial positions while some of the older figures such as Margaret Beckett will go."

Downing Street aides dismissed Seldon's comments yesterday, insisting he had no special access to Downing Street. "He is not an official biographer. He has had no special access. He is an unofficial biographer of the PM, not a spokesman," one said.

However, privately Mr Blair has made much of the power of his continuing patronage to counter any decline in influence after announcing that he would not seek a fourth term.

Last week John Hutton, the Cabinet Office minister and one of the rising Blairite stars promoted to the Cabinet after the general election, pointed to the pace of reform. In a little-noticed speech, which will risk infuriating the Labour left, he declared that the party must accept the power of consumer choice and the market in public services.

He said: "Our party's acceptance that we can put the consumer first in public service provision, that profit can be compatible with public service, that choice should be the norm, not the exception - these should be the guiding lights for the programme of public service reform in our third term."

Mr Blair is due back from holiday "very shortly", Downing Street said yesterday, adding that he has a bulging in-tray.

But he faces an angry confrontation with senior figures in the unions over the direction of reform, amid anger at the increasing use of private firms in public services. Union leaders, including some of Labour's biggest affiliates, plan to use next month's TUC conference to press opposition to increasing privatisation and the use of the market in the public services.

Unions are also angry about proposed changes to public-service pension arrangements and civil service job cuts. They are also demanding greater employment protection in the wake of the Gate Gourmet dispute.

The giant public service union Unison is leading the charge against private sector involvement in public services. Its motion to the TUC urges unions to "oppose the markets in health, education and criminal justice and the drive towards greater privatisation, under the false pretext of greater choice".

The National Union of Teachers is sponsoring a motion rejecting "government moves to expand the role of the private sector in public services, including the introduction of private sponsors".