Mandelson backs refinery over staff

The Business Secretary said a statement from energy firm Total provided "full reassurance" and dispelled the "perception" that Britons had been discriminated against.

But his insistence that there was "no problem" with EU rules on the free movement of labour appeared to contradict earlier comments from a Cabinet colleague.

Health secretary Alan Johnson - a former union leader - said rulings from the European court had "distorted" the law, and suggested changes may be needed.

The hint at tensions within the Government emerged as the row threatened to escalate sharply.

Hundreds of contract workers at the Sellafield nuclear site in Cumbria will hold a mass meeting to discuss taking industrial action.

Contractors at the Heysham nuclear power station in Lancashire are also expected to decide whether to join the unofficial walk-outs in support of workers at the Total oil refinery in Lincolnshire, where the dispute started.

Bosses from Total will meet with sub contractors and union leaders for hastily-arranged talks in Scunthorpe, the Press Association understands.

Moves are also under way to set up a special panel, under an independent chairman, to review the recruitment of hundreds of Italian and Portuguese workers on the £200 million plant at the giant Lindsey Oil Refinery at North Killingholme, North Lincolnshire.

Unions claim Britons were not given any opportunity to apply for the posts.