Trade and industry secretary Alan Johnson has insisted that the government will uphold a deal allowing existing public sector workers to retire at 60.
Business leaders have been stepping up the pressure on ministers to tear up last month's agreement on the grounds that would be unaffordable and unfair, given that private sector workers have to retire at 65.
The issue is particularly pressing given tomorrow's publication of the Turner report into pensions, which is expected to recommend that the retirement age be pushed back to 67.
But today Mr Johnson said he would honour the public sector pensions deal because it was "very good, very fair, very reasonable and very sane", noting that all new workers would be required to work until they were 65.
Hours later, during a speech to the CBI conference in London, Tony Blair confirmed that the deal would stay, insisting that that the high turnover of staff meant that within ten years, the vast majority of workers would be on the new retirement age.
Responding to CBI president John Sunderland's claim yesterday that the deal was "totally unacceptable", the prime minister said: "I understand your concerns.
"But it is important, as a matter of balance, to point out that the savings, rising to £13 billion over 50 years, are the savings we set out to make; and crucially, that ten per cent of the public sector workforce is replaced each year.
"All new entrant, whatever their age, will from 2006 have a retirement age of 65 not 60. In little more than a decade, the majority of civil servants, for example, will be on the new retirement age."
Unions have rejected any suggestion of reneging on the deal, and today the National Union of Teachers (NUT) reassured its members that the agreement would be implemented.
General secretary Steve Sinnott said there had been no indication from the government that this would not be the case, adding that press reports indicating otherwise were "pure speculation".
"The agreement that members of the current pension scheme should continue to be able to retire at age 60 on full pension is a 'done deal'," he said in a statement.
"NUT members will be kept informed by the union. We will respond strongly and urgently if there is any move by the government to 'unpick' what has been agreed."
The deal agreed by Mr Johnson last month covers health and education workers, and civil servants. An agreement on local government workers' pensions has yet to be reached.