Hopes of an early settlement to Birmingham City Council’s wage dispute were fading fast today after mass meetings of workers overwhelmingly rejected a peace plan.

Hundreds of union members voted in a show of hands against an improved offer in the long-running row over a new pay and grading system and agreed to continue taking industrial action.

The decision represented a blow to council human resources cabinet member Alan Rudge, who was confident of bringing off a settlement after two weeks of intensive negotiations.

Union officials, who agreed to put Coun Rudge’s offer to the workforce without a recommendation to accept or reject, are understood to have been surprised by the strength of feeling against the proposal.

In one meeting, attended by about 600 workers, only two people voted to accept the deal. Coun Rudge last night blamed "rabble rousers" for attempting to derail the deal. He claimed the meetings had been infiltrated by far-left groups who were "telling mistruths".

Coun Rudge (Con Sutton Vesey) added: "These meetings were attended by less than one-tenth of the total union membership. We have put a very good offer on the table which concentrates on protecting those who stand to lose out, but people are being misled.

"Obviously there should now be a ballot because we are hardly likely to get a sensible reaction from a few hundred rabble rousers."

Members said the extra £9 million found by Coun Rudge to soften the blow of the pay and grading review, which will see more than 4,000 employees suffer salary cuts, was not good enough. They rejected an offer to extend a pay protection scheme to March 2011.

There were also concerns about plans to introduce an element of performance related pay when deciding future wage rises.

The pay and grading review is part of the national single status initiative to iron out wage inequalities between men and women and blue and white collar jobs. Almost 20,000 low-paid council employees stand to pocket wage rises and back pay under the proposals.