Party rejects Prime Minister's choice as general secretary

He wanted the job to go to Ray Collins, assistant general secretary of the Transport and General Workers' Union (T&G), an experienced union organiser, who worked closely with the highly respected former T&G general secretary Sir Bill Morris.

But members of the NEC voted by 16-10 to appoint Peter Watt, who has worked for the Labour Party in a variety of posts since 1996. The appointment - in the same week that the Prime Minister suffered his first defeat in the House of Commons, over anti-terrorist legislation - is seen in Labour circles as another sign of Mr Blair's loosening grip on his party.

"Even Michael Foot knew how to get the general secretary he wanted," one MP remarked.

The defeat has been blamed on heavy and counter-productive lobbying by political advisers working in Downing Street. One union official said: "Frankly, one of the reasons Ray didn't get the job was because Tony Blair backed him.

"He is very, very much a party man, a solid supporter of Tony Blair, and a moderniser. Politically there isn't anything to choose between him and Peter Watt." One member of the executive said: "The way they canvassed for their candidate was counter-productive, and Peter performed better on the day."

Mr Blair has already suffered the loss of his most experienced advisers on party affairs - Sally Morgan, who has gone to the House of Lords as Baroness Morgan, and Pat McFadden and Jon Cruddas, who have been elected as MPs.

He has also, temporarily, lost the party chairman, Ian McCartney, who is recovering from heart surgery. Mr McCartney normally acts as the main negotiator between the Cabinet and the Labour Party.

"If Collins had been put forward as McCartney's candidate instead of Blair's, he would have got the job," one insider said.