Local government across Oxfordshire is being destabilised with renewed talk of scrapping the county council.

The warning came from its leader, Keith Mitchell, who said speculation about the future of County Hall would have an adverse effect on staff. Mr Mitchell said Government hints that it might back Oxford City Council's case for new unitary councils was already causing unnecessary worry for county council employees concerned about their futures.

And he feared the issue would damage the working relations between the city and county councils in key areas such as waste and the regeneration of Oxford's West End.

Mr Mitchell spoke out after news that Oxford city is joining forces with councils in Exeter, Norwich and Ipswich to try to convince the Government that they should run all services in their cities.

The four councils are expected to make bids for unitary status in 2009 by the end of the summer.

While the county council is yet to give its formal response, Mr Mitchell made clear that he did not believe the city was in a fit state to run services such as schools and social care.

And this week he criticised the Government for provoking needless uncertainty and confusion about local government and the delivery of council services.

He said: "There seem to be different messages coming out of Government every week. David Miliband, the minister responsible, likes to throw ideas around and see where they land. Miliband was here two weeks ago and we are told he is sympathetic to Oxford city council's case. It is destabilising, to say the least, and worrying for staff. It makes people wonder what their future will be."

Mr Mitchell has suggested having a single point of contact for some services.