Trade unions representing thousands of Birmingham City Council workers are considering a legal challenge to the £2 billion privatisation of the highways network.
Union leaders have withdrawn co-operation after months of behind the scenes discussions about a proposed Private Finance Initiative that would see responsibility for repairing and maintaining the city's roads, pavements and street lights handed to a private consortium.
The council cabinet is in advanced talks with companies interested in bidding for a 25-year contract.
Steve Foster, chairman of the council's joint trades unions PFI committee, said a ballot for industrial action could not be ruled out. The legality of the hand-over could be tested in the courts. The unions fear wage cuts and poorer conditions of employment for several hundred employees whose jobs would be affected by the transfer.
Mr Foster said: "The unions believe that to privatise the entire road network for a minimum of 25 years would be disastrous, taking control from the council and making profit the motive for maintenance. The loyalty of private contracting companies is always firstly to the banks and their own shareholders."
He said the unions had made every effort to negotiate with the council to bring about an "amicable solution".
Mr Foster added: "Unfortunately, due to the privatisation agenda being pushed by certain officers in the council, this has been impossible. No consultation has taken place with the unions, or the public, over this matter."