LABOUR last night accused the UK Government of yet another policy U-turn after it was suggested Chancellor George Osborne was getting cold feet over a £1 billion plan to sell off the Coalition's 49% controlling stake in Britain's National Air Traffic Services (Nats).

Industry sources claimed that the Treasury was rethinking the proposal to sell off the air traffic control provider because it was fearful the German equivalent to Nats would make a move to take over the UK's air space after it was suggested the seven British airlines, which form the Airline Group, might sell their collective 42% share to Germany's state-controlled DFS.

One industry source said: "It would not be a good idea to hand control of Britain's skies to Berlin.

"This is what is making the Treasury nervous. All the signs are that the Government is not now going to go ahead with the sell-off of its share."

In 2010, the Government indicated it was prepared to sell off all or part of its golden share in Nats – which has two centres, at Prestwick in Ayrshire and Swanwick near Southampton – following on from the decision by the previous Labour administration to sell a 51% stake to airlines and BAA, the airport operator.

Yesterday, Maria Eagle, the Shadow Transport Secretary, accused Prime Minister David Cameron of presiding over "yet another U-turn from a shambolic Government".

"It is incredible that ministers have until now ignored our warnings that a foreign government would be the most likely buyer if a controlling stake in Britain's airspace was put on the market," she declared.

"This sell-off would have delivered no benefits to the aviation industry, passengers or the taxpayer."

The Airline Group has previously warned of "highly damaging" consequences such as threats to safety if the UK Government sold off its controlling stake.

A Treasury spokesman declined to comment because the matter involved "commercial issues".