A row over the future of Brighton & Hove City Council's 13,000 homes has led to two dramatic resignations and a no confidence vote in leader Ken Bodfish.
The argument blew up after Mr Bodfish (Lab) cancelled a vote expected to create an arm's-length management organisation to take over the homes.
Housing committee chair Jack Hazelgrove (Lab) and his deputy Kevin Allen (Lab) resigned amid angry scenes during a full council meeting.
The vote had been scheduled in the belief that gap funding - needed to plug the gulf between the value of the council's housing stock in a sale to a housing association, and the debt incurred in building it - would run out in 2007.
The council therefore believed it was vital to secure a vote for an ALMO.
Mr Bodfish cancelled the vote after it emerged the funding would unexpectedly continue to be available after the present Treasury spending round ends in 2007.
A number of councils feared they would be caught by this deadline, so the Office of the Deputy Prime Minister wrote to them saying it would continue. Legal advice from officers said the council could face judicial review if it voted without reconsidering transfer in the light of this.
Mr Hazelgrove said the availability of gap funding was already known, and he was 'shocked and dismayed' when Mr Bodfish insisted on deferring the vote.
An ODPM spokesperson said it had issued the letter because 'some councils had got it into their heads that 2007 was the end of gap funding, so we clarified that it will continue'.