The dispute has prompted the Council of Welsh Districts to accuse Alan Atherton, chairman of the English Staff Commission, of attempted sabotage.
Richard Lloyd Jones, Welsh commission chairman, last month wrote to Welsh Office minister Gwilym Jones to repeat his view that under TUPE rules all employees should transfer to reorganised authorities on 1 April 1996 (LGC, 16 December).
But the English Staff Commission has responded with a letter to its own minister, Robert Jones, reminding him of the implications this policy would have on reorganisation in England.
'If the Welsh Office replies positively to the Welsh Staff Commission's recommendation, then it would denote that government policy, as embodied in our guidance, has changed,' Mr Atherton said.
'We assume that in these circumstances you would wish to change our policy guidance,' his letter ended.
The challenge has not been ignored by the Welsh Staff Commission. A further letter to Gwilym Jones, Parliamentary secretary at the Welsh Office, repeats the view that transfer rights should apply to all employees in Wales, even staff in the six districts and seven counties which will be split up as a result of reorganisation.
'The commission has asked me to make these points clear, with a view to any interdepartmental discussions that may arise from Mr Atherton's letter,' Mr Lloyd Jones wrote.
Paul Griffiths, assistant secretary at the CWD, accused Mr Atherton of trying to disrupt a consensus in Wales.
He lambasted the 'instinctive tendency of the English establishment to find common cause in blocking Welsh solutions to our own particular circumstances'.