The Deputy Prime Minister is withholding £30m from the newly appointed "respect co-ordinator", Louise Casey, despite a personal request from the Prime Minister.
The controversial 40-year-old official, who recently threatened to "deck" Downing Street colleagues, is a favourite of Mr Blair. he instructed three Whitehall departments to hand over a total of £90m to fund a "respect task force".
But while the Home Secretary, Charles Clarke, and the Education Secretary, Ruth Kelly, have handed over their shares of the cash, Mr Prescott is standing firm.
"John's view is that we are already spending £500m tackling this, and that money's all accounted for," said an ally.
Control over the "respect agenda" has become a test of Mr Blair's authority as Gordon Brown isincreasingly seeking to assert his dominance over the Government.
One Blairite minister complained that the Treasury was being "very, very aggressive" in its pursuit of savings. Ms Kelly is among those who have received letters from No 11 over the summer demanding cuts. Mr Brown, who helped Mr Prescott to see off the request for cash for Ms Casey, will this week address union leaders pressing for a handover in a year's time.
Brendan Barber, general secretary of the TUC, whose conference begins in Brighton tomorrow, told The Independent on Sunday there was a hunger for a "new beginning".
"This is the start of the new political season. It's time for some calm reflection on the election result, which doesn't provide a lot of comfort or reassurance for Labour.
He added: "I do think it's important to have a sense of a new beginning and fresh thinking about how our political support can best be harnessed."
Mr Barber has already warned Mr Blair that he must allow his successor time to stamp his mark on the administration and prepare a manifesto for a fourth term.
Derek Simpson, head of Amicus, Britain's largest private sector union, yesterday urged Mr Blair to announce his retirement before next year's Labour conference. Mr Simpson said the Government needed "new impetus" and gave a clear hint that he would back Mr Brown for the leadership.
The Prime Minister is expected to attend a dinner with the union chiefs on Tuesday night but will not address the conference this year.Reuse content