The new contract must be in place by 1 October 1995. If the council chooses to assign the work to its own in-house labour force it must obtain prior permission from the environment secretary.
Mr Baldry told MPs yesterday:
'We have carefully considered the response of Gosport BC to the notice which was served in respect of the award of a contract for other cleaning work to the authority's direct labour organisation.
The authority has been given a direction under section 14 of the Local Government Act 1988.
The direction requires the council to re-tender the relevant contract so that new arrangements are in place by 1 October 1995.
They will have to seek consent should they wish to re-assign the work to the in-house team.
'The authority restricted competition in that, prior to the return of tenders, they asserted that the Transfer of Undertakings (Protection of Employment) - TUPE - Regulations would apply and decided to consider only TUPE-based bids.
'They also failed to provide tenderers with substantive details regarding the possible availability of depot space,' said Mr Baldry.
'The government will continue to act against councils whose actions amount to anti-competitive behaviour.
'We are determined to ensure that obstacles which stand in the way of full and fair competition are removed, so that taxpayers continue to get value for money for quality services.'