Employers will retain the right to make their staff retire at 65 after a government decision yesterday to water down its commitment to combating age discrimination in the workplace.
Organisations representing older people were expecting a breakthrough in employment rights to let staff stay on as long as they were fit for the job.
But Patricia Hewitt, the trade and industry secretary, gave in to pressure from business leaders who said companies wanted a default age at which staff could be compulsorily retired.
The charity Age Concern said her decision was "a cowardly U-turn" and Help the Aged said age equality was being given a back seat.
The impetus for a change in the law came from an EU directive against age discrimination which is due to come into effect in 2006. The government originally canvassed two options for legislation: to abolish the compulsory retirement age or fix it at 70.
Under proposals published yesterday, it will legislate to set a default retirement age at 65 but give employees the right to request an extension, which employers will be entitled to reject for business reasons.
Companies will no longer be allowed to set compulsory retirement ages under 65 unless there are reasonable grounds for particular jobs - such as fitness for heavy manual labour.
Ms Hewitt - who promised a further review in five years - said the government was committed to tackling age discrimination, which cost the UK ?16bn a year. But it had listened to "strong representations" from business that companies still relied on having a default retirement age. "This legislation is not about forcing people to work longer."
Alan Johnson, the work and pensions secretary, said: "If the formal review of the legislation suggests that we should abolish compulsory retirement ages, then that is what we will do."
The CBI said the announcement was "sensible and pragmatic", but the TUC was disappointed that workers could still be denied a choice of retirement date.
John Carvel, social affairs editor The Guardian