In a letter sent on Wednesday to Preston leader Valerie Wise and her deputy, Dr Mawhinney said: 'We will soon learn whether Mr Blair regards the pair of you as too embarrassing - or merely as par for the course in Real Labour local government.'
During a local radio interview this week Ms Wise told Dr Mawhinney she was considering starting disciplinary investigations against Mr Driver. Mr Driver told LGC this was the first he had heard of it.
The two have clashed over whether councillors should be involved in the day-to-day running of the council. Mr Driver has maintained the blurring of officer and councillor roles can lead to corruption.
The package was unacceptable, according to the auditor, because it included extra pay for Mr Driver's work investigating internal corruption and malpractice.
'It's common knowledge in the town hall that I virtually lived there for two years,' said Mr Driver. He said he would not be repeating his request for early retirement. 'I want to go back and complete the work I was hired to do.'