BACK-bench Labour MPs are threatening to rebel over the deal on trade union recognition which was endorsed at yesterday's Cabinet meeting.

As the wrangling moved closer to its denouement there were hints yesterday that some unions might withhold money that would normally have gone to Labour, should the Government renege on its promise to legislate for recognition where a union can demonstrate majority support.

Even ultra-cautious TUC General Secretary John Monks conceded that unions would be ''concerned'' if the White Paper Fairness at Work includes a stipulation that unions must win a 40% ''Yes'' ballot vote before winning recognition.

At Westminster last night, a string of Labour MPs conceded publicly and privately that the proposals were simply not good enough and predicted a major rebellion.

One Government Whip confided: ''It will be ballistic - nuclear. It will make the revolt over lone parent benefits look like a children's tea-party.''

The vehicle for such a rebellion could well be an amendment to the Government's forthcoming trade union legislation being drawn up by the SNP and urging that a simple majority should suffice to win recognition.

Mr Monks said that unions would judge the paper, now expected to be published next Thursday, as a whole and welcomed the signs that it would be seen as a comprehensive package with many real advances for people at work.

He was speaking after yesterday's weekly Cabinet meeting endorsed the outline of the Government's draft proposals for new union rights.

Although the Prime Minister's official spokesman would not say whether the package contained the controversial proposal to demand that 40% of a workforce participate in any ballot before their union is recognised, it is widely accepted that it will do.

Most union leaders feel that such a hurdle would be in direct contravention of Labour's manifesto pledge to legislate for union recognition where a majority of the relevant workforce is in favour and do little to assist recognition.

Unions had been pressing for a simple majority which the TUC controversially amended subsequently to a 30% minimum.

However Mr Blair's spokesman insisted that the package ''should be seen in the round'' and that it touched on individual workers' rights, collective rights and family-friendly policies. He said that it would ''work with the grain of the kind of change people want''.

Board of Trade President Margaret Beckett emphasised that it would deliver stability for industrial relations and, according to Mr Blair's spokesman, every Cabinet member endorsed it including Deputy Prime Minister John Prescott who, he said, had specifically disowned newspaper reports that he had ''hit the roof'' over the proposals.

Mr Blair's spokesman said there only remained Is to be dotted and Ts to be crossed. He said: ''When people see the White Paper and when these measures come in, they will see it is a substantial package of change.''

It remains to be seen whether the package will find approval among trade union leaders and, more particularly, back-bench Labour MPs with union connections, many of whom are said to be ready to rebel if the Government reneges on its commitments.

Meanwhile, Geoff Martin, a London official of Britain's largest union Unison, which holds its conference of Labour-affiliated members next week, spoke of a ''growing unease'' inside the Labour movement about the way the Government was treating unions. He suggested that unions would have to consider whether their ''investment'' in the Labour party was showing a decent level of return.