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Staff that transfer to a registered social landlord after a stock transfer have their pay and conditions protected by the TUPE regulations. Unison general secretary Dave Prentis is understood to be demanding that prime minister Tony Blair extend this guarantee to all staff hired after the transfer.

This rule, part of a new code of practice agreed for other parts of the public sector by the government earlier this year, would prevent the development of the so-called "two-tier" workforces that can arise when services are taken over by private contractors.

Sources within the sector said that applying the code to transfer housing associations would cause havoc with staff and make partial transfers unfeasible.

Unison's stance has been interpreted by many as the latest assault on the government's stock transfer policy, which it vehemently opposes. Simon Dow, chief executive of the Guinness Trust, said: "It would be extraordinary if Unison were to have its way – stock transfer would be out of the question.

"The change would be completely unfair to the existing workforce, and the unfairness of the two-tier workforce would move to other parts of the associations."

James Tickell, deputy chief executive of the National Housing Federation, said: "It's very important that new transfer associations should have reasonable freedom to re-examine the terms and conditions of staff."

Blair and Prentis both played prominent roles in negotiating the final terms of the code of practice back in February. Then, Unison heralded the code as a "significant victory" in its campaign to end the "two-tier workforce in local government".

By talking to Blair about the issue, Prentis will be raising the stakes in a feud over the implementation of the code that has been raging between the Office of the Deputy Prime Minister and Unison for weeks.

Under the agreement, companies awarded public contracts will be obliged to include the code of practice in the terms and conditions offered to new employees. Those conditions must be "no less favourable" than those offered to the local authority staff. Staff who feel they have been unfairly treated will be able to seek redress, although dispute resolution procedures are still being negotiated.

But ODPM civil servants made it clear last week that the code of practice would not apply to housing associations involved in either partial or wholesale stock transfer.

A spokesperson for the ODPM said: "Where there is a sale of the housing to a new landlord [a registered social landlord who will let property as social housing] even though staff transfer under TUPE, the code will not apply.

"This is because staff appear, in these circumstances, to be employed by the housing association to provide services to itself, and therefore do not appear to be covered by the code. The code would apply to a registered social landlord if it were to win a contract from a local authority to undertake a statutory function of the council that remains with the local authority but which is a service it contracts out to the housing association."

This clarification came as a great relief to housing associations hoping to be involved in future transfers. But Colin Meech, Unison's national housing officer, rejected the ODPM's interpretation. "Local authorities have contracts embedded in the sale of housing stock to a housing association, relating to the homelessness and accommodation rights functions," he said.

The ODPM's position "goes against the spirit of the agreement with the government," he added.