Now Blunkett and Brown are at loggerheads

David Blunkett has urged Gordon Brown to cool his desire to take over from Tony Blair, as part of a bitter dispute between Home Secretary and Chancellor over the Home Office's blueprint for the next five years.

David Blunkett has urged Gordon Brown to cool his desire to take over from Tony Blair, as part of a bitter dispute between Home Secretary and Chancellor over the Home Office's blueprint for the next five years.

Mr Brown, a long-standing critic of what he regards as inefficiency at the Home Office, has refused to sanction Mr Blunkett's five-year strategic plan because he is not satisfied it would deliver value for money.

The Chancellor's intervention has delayed publication of the plan and infuriated the Home Secretary, who has appealed over Mr Brown's head to Mr Blair. Mr Brown and Mr Blunkett have clashed during previous spending negotiations but repaired relations. Whitehall sources say their relationship is now "back in the deep freeze".

Mr Brown has not taken a close interest in the five-year plans for health and education because he had already allocated their budgets for the next few years. But he was alarmed by Mr Blunkett's proposals to boost spending on community support officers and prisons and is forcing him to justify them in great detail. After a new outbreak of tension between Mr Brown and Mr Blair, Mr Blunkett says in an interview published today that the Chancellor should temper his leadership ambitions and suggests Mr Blair will continue as Prime Minister for some years.

"It's important that those of us who are privileged, because we are, to be at the very cutting edge of government, to be at the centre of events, don't presume that we should be immediately taking somebody else's job," he told the New Statesman.

Although he insisted his spending negotiations with Mr Brown were "perfectly amenable", he added: "I'd like the Prime Minister to remain as long as he feels he has the drive, the energy and leadership to do it, and I see no sign of those diminishing at all."

Mr Brown, who held meetings about his government-wide spending review yesterday, has also been involved in difficult negotiations over the transport and defence budgets.

Alistair Darling, the Transport Secretary and an ally of Mr Brown, has resisted Treasury demands for cuts in his department's spending. The Chancellor is understood to have demanded more savings on subsidies to the rail services, which have soared in spite of a failure to convince travellers they are improving.

The roads budget could also face deep cuts, despite demands by the CBI for more road building across Britain. Rumours of a "bust-up" between Mr Darling and Mr Brown were denied last night by friends of the Transport Secretary.

Geoff Hoon, the Defence Secretary, has been ordered to make cuts in the armed forces, although it will be presented as a small real-terms increase in his budget when the figures are published on 12 July. The Navy will have to mothball a number of warships. The Army could lose two battalions but the most savage cuts are facing the RAF, threatened with losing 5,500 men.

There have been rumours that the Red Arrows could also face the axe but sources close to the Defence Secretary dismissed the idea. The £20bn Eurofighter project is being blamed for the bulge in spending but the Chancellor has been told penalty clauses in the contract for 232 of the fighters are too expensive for the order to be scrapped.