The issue, although it concerns jobs abroad, threatens to produce the first serious split in the left-wing governing coalition. It is seen by Communist and radical Socialist members as a test of Mr Jospin's willingness, or ability, to soften the market- oriented policies of the previous centre-right government.
It is also the first clear example of Mr Jospin stumbling over his pledge to keep his pre-election promises. During the election campaign in May, he said he would force the partially state-owned car company to "re-open the dossier" of the closure of the Vilvorde plant, near Brussels, with the loss of 3,100 jobs.
Earlier this month, Mr Jospin appointed an independent consultant to study the options. She reported back last week that there was no way to save the plant without jeopardising Renault's wider strategy to improve its international competitiveness.
Jean-Luc Dehaene, the Belgian Prime Minister, accused Mr Jospin of "giving false hope" to the Vilvorde workers to win votes in France. Even though the French state remains the largest single shareholder in the company, Mr Jospin says he cannot force Renault to change its mind. "That's all very well but Jospin ought to have known that when he was in opposition," Mr Dehaene said.
Mr Jospin will seek to explain himself to the Socialist group in parliament today and, possibly, to the nation in a television interview on Thursday. A continuing row threatens to destabilise the awkward balancing act he has attempted since he became Prime Minister on 3 June. He insists he will honour his campaign pledges to adopt a more reflationary, and more jobs-oriented, policy than the centre-right government. He has, however, delayed most spending decisions until November and has pledged to stay within shouting distance of the budgetary guidelines for membership of the European single currency.
With anxiety growing on the left that Mr Jospin is already drifting towards pro-business and pro-market orthodoxy, the failure to intervene to save Vilvorde could could become a flashpoint within the Socialist, radical, Communist and Green coalition. Tempers will not be improved by the announcement yesterday that unemployment rose by 1.1 per cent, (32,000) in May, the sharpest monthly rise for four years. Although the increase cannot be blamed on Mr Jospin, it will strengthen the voices of those calling on him to abandon budget orthodoxy and pump up the economy with salary rises and increased public spending.
Mr Jospin's discomfort has been greeted with undisguised joy on the centre right. Philippe Seguin who will be elected later this month as the new leader of the neo-Gaullist RPR, said: "Within the space of a month, Mr Jospin has forfeited the right to give lessons in morality to the entire world."