Downing Street says it is "not appropriate" to start speculating about the possibility of giving Margaret Thatcher a state funeral.
No 10 says it will not discuss funeral plans for Lady Thatcher
Labour MP Rosie Cooper reportedly raised the issue after she understood civil servants in the Cabinet Office were drawing up plans for the occasion.
The Daily Telegraph says Tony Blair's political secretary replied, saying "there are no such plans".
Senior Tories claim the stance is an appeasement to left-wing Labour MPs.
According to the paper, Miss Cooper, MP for Lancashire West, wrote to Number 10 saying some of her constituents were "appalled" by the idea that Lady Thatcher, Britain's first female prime minister, should be accorded such an honour.
John McTernan, Mr Blair's political secretary, said he could confirm there were no such plans and hoped "that this reply reassures your constituents".
A spokesman for Number 10 said: "It is not appropriate to start speculating or discussing it in any way."
But Gerald Howarth, Lady Thatcher's former parliamentary aide and a Tory MP, told the Telegraph: "That is Blair all over.
"It is contemptible. He claimed the mantle of Thatcher but when the going gets tough with Labour MPs, he throws them a bone."
Conservative leader David Cameron's spokesman said: "Margaret Thatcher was one of Britain's greatest prime ministers and she remains in good health."
Miss Cooper told the paper she was surprised by the reaction from Tory MPs to Downing Street's remarks.
She said that although Lady Thatcher had been a long-serving prime minister, she was not of the stature of Winston Churchill, who led the country through the Second World War.
'Great war leader'
"There is still a negative reaction to Lady Thatcher in the north of England," she said.
"Her policies had a dramatic impact on life in the North. She is not revered in the areas which suffered most during her tenure."
Lady Thatcher became prime minister in May 1979 and went on to spend 11 years at Number 10, a record unmatched in the 20th Century.
Churchill died aged 90 on 24 January 1965 and a state funeral was held at St Paul's Cathedral a week later to honour his life as a great war leader.
His body travelled on a gun carriage from Waterloo Station to St Paul's Cathedral where it was borne up the steps by officers from the Grenadier Guards.
A precedent had been set in 1852, with the lavish state funeral of the Duke of Wellington.
These apart, the term "state funeral" has been reserved for reigning kings and queens.