The Prime Minister faces an open rebellion over his attempt to fight compensation claims made by wounded troops after a ministerial aide described the move as "bonkers".
Eric Joyce, a parliamentary private secretary to the Defence Secretary, Bob Ainsworth, said that court cases brought by the Government, which are designed to cut payments to two injured servicemen, were "profoundly wrong". His remarks caused anger among ministers.
Mr Joyce said that the Government should not remove "a penny" from the men who were struggling with injuries and hinted that he would inflict another resignation on Mr Brown if the court action was upheld. Mr Ainsworth has already announced a review of the way in which armed forces personnel are compensated but has refused to drop the test cases.
"Politicians have to recognise that while the public will give us a lot of rope at times, where we get the moral call profoundly wrong on a matter of how we treat our astonishingly brave service personnel, we'll find ourselves dangling at the end of it," Mr Joyce said.
Ministers questioned whether Mr Joyce, a former Army major, should be allowed to keep his role at the Ministry of Defence (MoD). However, Government sources said that Mr Joyce would hold on to his position. Downing St refused to criticise Mr Joyce last night, despite his clear breach of the doctrine of collective responsibility. Ministerial aides are usually expected to step down if they plan to criticise the Government. In an article, Mr Joyce wrote: "A strong technical argument has come into direct contact with what most people think is the right thing to do. While politics has a bad name at the moment, political instincts should by definition usually lead to decisions which most people agree are fair and right.
"In this compensation case, a victory for the MoD in October at the Court of Appeal would come against the backdrop of a giant neon sign saying spelling out the word 'Pyrrhic'. It would represent a victory for bureaucracy over bravery."
The MoD's action in the Court of Appeal, which is ongoing, challenges the payouts awarded to Corporal Anthony Duncan and Royal Marine Matthew McWilliams. Cpl Duncan was originally awarded £9,250 after he was shot in the leg while in Iraq in 2005 but his award was increased to £46,000 as a result of complications during his surgery. Mr McWilliams initially won £8,250 for fracturing his thigh on a training exercise but his payout was later increased to £28,750.
The MoD argues that it should not be held liable to pay for the men's medical complications.
The criticisms from Mr Joyce prompted a fresh offensive from the Armed Forces minister Bill Rammell, who said that not challenging the men's payments would have been "unfair and disadvantaging" to their more seriously injured colleagues.
"If this were about money then the Government wouldn't have doubled the maximum payout in compensation as we did just last year," Mr Rammell told the BBC yesterday. "Those are not the actions of a Government which is resigning from its responsibilities."
The Conservatives pushed Mr Joyce's comments as further evidence that the Prime Minister had lost control of his Government which they claimed was in a fast and terminal decline. Greg Hands, a Treasury spokesman for the Tories, said that ministers appeared to be "losing the will to govern".
Speaking out: Labour's rebels
*Tom Harris, the former transport minister, tried to fend off criticism after he said that the public were "bloody miserable" as the credit crunch hit. Gordon Brown was not so laid back about the remarks, however, and Harris was sacked at the next reshuffle.
*Hazel Blears' now infamous "YouTube if you want to" jibe at the Prime Minster made her Cabinet role impossible. Brown publicly accused her of "totally unacceptable behaviour" following a series of allegations about her parliamentary expenses, but Blears stepped down in June before she was pushed.
*Angela Smith, a ministerial aide, admitted that she had "concerns" over the abolition of the 10p tax rate. She was persuaded not to resign after Gordon Brown interrupted a US trip to talk her round.
*Jim McGovern felt he could not remain a ministerial aide in the Business Department after saying it "beggared belief" that a private company could be selected to advise the Royal Mail.