Labour set for battle of the bulge as Two Jags squares up to Two Pizzas

After a summer of shadow boxing, political heavyweights John Prescott and Charles Clarke are preparing for a proper punch-up.

The bout is being billed as the battle of "Two Jags" versus "Two Pizzas" – with Mr Prescott, the Deputy Prime Minister, tipped to knock out Mr Clarke, the party chairman.

The root cause of the enmity is a meal at Pizza Express in Victoria Street, London, in which Mr Clarke not only ate two pizzas but branded Mr Prescott as "useless" and wrote off Gordon Brown's chances of ever becoming Prime Minister.

Sadly for Mr Clarke, the other diners were John Healey, a Treasury minister, Christopher Leslie, a minister in the Office of the Deputy Prime Minister, and Rosie Winterton, a Prescott ally.

Affronted by Mr Clarke's "impudent" claims that he would one day get his job, Mr Prescott has told colleagues he will not quit at the next election but will stay for another term to take on his rival.

The outburst, typical of Mr Prescott, comes just weeks before the party gathers for its annual conference in Blackpool and puts added weight on the shoulders of Mr Clarke, who has endured a summer-long whispering campaign against him.

At the TUC conference last week, MPs and ministers from all sections of the party were predicting that Mr Clarke had until Christmas in his present job.

But no one was speculating on the promotion the party chairman is said to crave. "There'll be a reshuffle before the end of the year and he'll be sacked," said one source.

Although Mr Clarke has denied most of the allegations against him, his behaviour has been the subject of a steady stream of reports in recent months. Downing Street is now understood to regard him as "seriously damaged".

But it is the party chairman's handling of the trade unions and the difficult issue of their continued funding of the Labour Party that has truly raised hackles.

A three-year agreement for trade union funding of the party, which would take it into the next general election campaign, is under negotiation. Labour, with debts of around £6m, knows it must agree a deal, hopefully by the time of the Blackpool conference.

But Mr Clarke has rubbed the unions up the wrong way. A union source said his initial plea to them to sign up to the funding deal met with a "big backlash" when he implied failure to do so would lead to parties being funded by the state.

"He overstepped the mark – not for the first time," a government source said.

A trade union source added: "When he started off we thought he was going to be a good thing. He was supposed to build up links, but Charles's style is such that all he does is make enemies.

"That was OK when he was attacking the Tories but no one can remember the last time he [did that]. He spends his entire time attacking people within his own party."

The Contender vs the Rhyl Bruiser: how they weigh in

Charles "Two Pizzas" Clarke

Current form: Party chairman, aged 51, he still feels he has a long way to go.

Diet: Two of everything, all washed down with his favourite tipple – red wine.

Training: If appearances are anything to go by, he's a man who enjoys the comfort of the back seat of his ministerial car. Has a strictly off-the-pitch interest in football as a season-ticket holder at Norwich City.

Fight history: More verbal than physical, he likes to talk down his opponents ahead of the bout – a bit of a Chris Eubank. But he survived two failed bids to get Neil Kinnock into No 10.

Fight prediction: Likely to be knocked out by Christmas.

John "Two Jags" Prescott

Current form: At 64 and Deputy Prime Minister since 1997, he's reached the pinnacle of his political career.

Diet: If the Earth Summit menu is anything to go by, will eat anything as long as there's lots of it, it's expensive and someone else is paying.

Training: Has earned his nickname with a rigorous routine that precludes walking or using public transport. Notorious for his 250-yard drive to the conference hall in Bournemouth.

Fight history: A real bruiser, he landed the only proper punch of the last election campaign – on the jaw of a protester in Rhyl.

Fight prediction: Has the stamina to go the distance. Don't underestimate him.