The Herald (p1) reports that Wendy Alexander, minister for communities, has clashed with Glasgow's leader, Charles Gordon.
While Glasgow has been working towards the transfer of around 80,000 houses to the new association, it appears that the Scottish executive negotiating team is pressing for immediate secondary transfers of stock to much smaller, community-based housing associations or existing associations.
Such transfers would have serious implications for the almost 2,000 housing department staff, with unions already sceptical about their employment rights could be protected as the move from one employee to another.
Mr Gordon said: 'Negotiations are at a very delicate stage and for that reason I'd rather not comment on any of the detail.'
A spokesman for the Scottih executive said: 'There have been a number of discussions involving the first minister [Donald Dewar] and councillor Gordon.
'This is clearly an important area of policy and detailed talks have been taking place at several levels for some time. The important thing is that the Scottish executive and Glasgow City Council work in partnership on such a key programme.'
According to council insiders, there is a fundamental philosophical difference between the minister for the communities and Mr Gordon on how the transfer is to be effected.
It is suspected that underlying the executive's position is a basic mistrust of councils and a concern about the size of the monolithic housing association espoused by Glasgow.