The Labour Party is facing a tough challenge to its use of the private finance iniative this week, at the Scottish Trade Union Congress in Glasgow.

The party's policy on PFI has been severely criticised by Unison, and its deputy secretary in Scotland, Mark Irvine, has resigned over the issue.

Tom Waterson, branch secretary of Unison at the Edinburgh Royal Infirmary, where a flagship PFI deal has caused huge controversy, said: 'Labour has betrayed us.

'We feel that as a branch we cannot continue to support the Labour Party because they are privatising part of our membership at the Royal Infirmary.' Mr Irvine resigned, saying he could no longer 'defend the indefensible.'

Scottish secretary Donald Dewar told activists that workers' pay and conditions would be protected when public services were transferred to the private sector.

But the Scottish National Party is presenting the resignations as a sign that the Labour Party in Scotland is about to go 'off - message'.