Leaked documents suggest ministers have decided the "wholesale outsourcing" of public services to the private sector would be politically "unpalatable".

The documents detail a meeting between Cabinet Office Minister Francis Maude and the Confederation of the British Industry (CBI). Ministers instead want to use more charities, social enterprises and employee-owned "mutual" organisations.

Outsourcing was meant to be a key part of the government's drive to cut costs and reduce the UK's budget deficit. The shift in policy will raise questions about whether the government can make the savings it has promised - or deliver the services it is committed to - just by using charities and mutuals.

The change will also raise questions about whether the Conservatives are bowing to Liberal Democrat pressure to focus more on delivering public services locally rather than privately.

The government's plans will be unveiled in the long-delayed Open Public Services White Paper which is expected to be published later this month.