CONTROVERSIAL plans to award Kier and Morrison housing maintenance contracts worth £250 million in Southwark, south London were put on hold last week.
The executive council was due to rubber-stamp a recommendation by council officers to contract out housing repairs to the private sector.
But the move to dump the council's 150-strong direct abour organisation, Southwark Direct, has now been suspended.
A Southwark spokesman said: 'The decision has been deferred for further discussion after further information came to light which could not be considered in public.'
The spokesman denied the delay had anything to do with a threat of legal action from construction union Ucatt, which represents local authority building workers at Southwark Direct.
Union leaders are furious that the council decided to dump the DLO after going through a 'best value' tender process.
London regional secretary Jerry Swain said: 'Bidding for these jobs was weighted 40 per cent on price and 60 per cent on quality.
'The DLO was cheapest in terms of price on the two contracts it went for so the council decided to take the private bids in terms of quality.
'But how can they do that?
The DLO has been doing the job well for years and the private firms would just be transferring the workers over, which is ludicrous.
'We should retain the skills in-house.
'It is purely political dogma to try to remove the contract from the DLO.'
Ucatt solicitors have written to Southwark council citing their concerns over possible breaches of public procurement rules.
The letter states: 'In view of my client's serious and genuine concerns on this issue, I respectively request that any decision to award the contract to Kier and Morrison is stayed pending a proper consider ation of the Public Procurement Rules.'