Watch BBC correspondent Owen Thomas' report in real video

Tony Blair is facing his first trial of strength with the unions over the hugely-controversial plans for a national minimum wage.

The low pay commission, created by the government to come up with a realistic figure, is believed to have suggested £3.60 an hour. It has also said young workers between 16 and 18 should be exempted and those between 18 and 21 should get a lower rate of £3.20.

Young employees may be exempt or get lower rate

The figure falls well short of what the unions were demanding and the move to exempt young workers will be particularly controversial.

The first shots in what could prove a long battle have already been fired. Union bossesled by the TGWU's Bill Morris have welcomed the fact that the principle of a minimum wage has been established - but they are angry that the suggested figure is some 50p less than they had been demanding.

And they have vowed to continue their campaign for a figure in excess of £4 and hour and for no exemptions or lower rates.

Threat to jobs

Sir Colin Marshall: figure is "acceptable"

Meanwhile, employers are signalling they can live with the £3.60 figure - with the CBI's Sir Colin Marshall describing it as "acceptable". That fact alone will be enough to anger some union leaders.

But it is highly unlikely that the prime minister will ignore the report and chose a higher rate. He is keenly aware of the potential threat to jobs by setting too high a level and is eager to keep on the right side of the employers.

He recently walked a delicate balancing act over workers' rights in the "Fairness at Work" white paper and, by upsetting both sides, probably avoided a full-blooded confrontation with either the unions or the employers.

Election pledge

Bill Morris on Today: a "missed opportunity"

But the minimum wage is a different matter. It was one of the key pledges which persuaded the unions not to rock the boat in the run up to the general election last May.

There are already mumblings of discontent at the government's current record and many unions are now deeply disappointed at what they believe is the latest attempt to cosy up to the bosses and they are determined to keep up the fight.

Mr Blair is equally determined to show that any lingering belief that Labour is still in hock to the unions is unjustified and he may even relish a battle that he is convinced he will be able to win.

The issue will also show whether the unions and their supporters on Labour's back benches really have the stomach for a fight with the government. Many will be prepared to put up with what they view as a second rate deal, happy that they have established the principle of a minimum wage.