James Purnell, one of the favourites to be the next Labour leader, has defied Gordon Brown by refusing to drop the speechwriter who launched an attack on the Prime Minister.
Phil Collins, an ally of Tony Blair, sparked fury in Downing Street last week with an article describing Mr Brown's stewardship of the party as a "tragedy" fraught with "strategic errors and political mishaps".
But in an act of quiet defiance which will anger the premier and stoke speculation over Mr Brown's future, the Secretary of State for Work and Pensions will continue to use Mr Collins as a speechwriter.
It comes as MPs return to Westminster after a week away following the disaster of the Crewe and Nantwich by-election, with many ministers torn over whether to demand a change of leader.
Mr Collins last night said that, despite his article in Prospect magazine, "nothing has changed" in his relationship with Mr Purnell.
Earlier this year Mr Collins turned down the offer of writing for Mr Brown, saying the Prime Minister needed a "magician" and "even a monkey with a typewriter" could improve his speeches.
The extraordinary move came as John Prescott triggered another round of Labour bloodletting when he hailed David Miliband, the strongest threat to Mr Brown, as a "leader".
The former deputy prime minister told an audience at the Hay Festival: "When you look at the candidates... this guy's clearly quite a brilliant lad and will be one of the leaders."
The intervention was criticised by a Labour source. "It doesn't take a rocket scientist to see how it looks divisive to call Miliband our leader."
In his article for the June edition of Prospect, Mr Collins wrote: "In the drama of British politics a Labour tragedy is unfolding. A combination of strategic errors, political mishaps and bad luck has left the party in a vulnerable position. The economy is turning soft and the electorate sour."
A friend of Mr Collins revealed last night that the Prime Minister had read his article and "sent him a message". Asked what Mr Brown's message was, the friend would say only: "The Prime Minister thought it was interesting."
Ben Wegg-Prosser, a former adviser to Mr Blair in Downing Street, confirmed speculation that the ex-prime minister wanted Mr Miliband to run against Mr Brown last year.
Mr Wegg-Prosser wrote in The Spectator: "Mr Blair, ... despite wanting a leadership contest last summer, was never able to do the heavy lifting to secure one."
As questions remain over Mr Brown's future, the party is braced for a slump in membership numbers, which stood at around 180,000 at the last count.
The Home Secretary, Jacqui Smith, is to address Labour MPs at a meeting tomorrow concerning concessions over plans to lock up terror suspects for 42 days without charge.
Stephen McCabe, the MP who masterminded Labour's campaign in Crewe and is married to Fiona Gordon – who is quitting as Mr Brown's political secretary – appeared to criticise Downing Street by attacking the "remarkably silly people in London who briefed rather than inquired".
The contest for the post of Labour's general secretary was plunged into chaos yesterday when Mike Griffiths, the contender from the Amicus wing of Unite, pulled out of the contest after the union's general secretaries refused to back him.
The hunt to find a replacement for Peter Watt was already in disarray as a result of the City high-flyer David Pitt-Watson pulling out after being selected for the post.
Ray Collins, the assistant general secretary of the T&G wing of Unite – and Mr Brown's chosen candidate – is now on a shortlist of one for the post. Mr Griffiths said: "The party will have been without a general secretary for over six months and has suffered major damage as a result."