Labour's election manifesto will make no pledge to abolish the controversila section 28 on the 'promotion' of homosexuality by local authorities.
The U-turn follows the government's battles over the age of consent with the house of lords. Labour fought the last two general elections pledging to scrap section 28 of the Local Government Act 1988, aimed at preventing local authorities from promoting the teaching of homosexuality in schools.
Labour's planned retreat follows a double setback over gay rights in the past year. First, the prime minister was stunned by the ferocity of a backlash in Scotland, where millionaire Stagecoach chairman Brian Souter bankrolled a 'Keep the Clause' campaign and financed his own referendum on the issue.
But the Labour-dominated Scottish parliament went ahead an repealed the section despite a big 'No' vote in Mr Souter's referendum.
In England and Wales, the house of commons vote to abolish section 28 was thrown out by the lords during the summer. There was more trouble in the lords when the government tried to lower the age of consent for homosexuals from 18 to 16.
Ministers had to use the Parliament Act to force the change through after two defeats by peers.
Now senior Labour Party strategists are said to have advised Mr Blair not to give a specific commitment on section 28. Instead, Labour's manifesto will include a broad promise to advance the rights of minorities such as gays, the disabled and other groups risking discrimination.
'The prime minister believes section 28 is wrong in principle and should be scrapped but he shares concerns that it may not play well at the polls,' said a government source.