Gordon Brown's new Government plans to reform the Whitehall communications machine in a move that will put pressure on COI to make greater use of new media.
One minister said: "COI has adopted more modern techniques in recent years but we think there is scope to go further. We want to make sure that it moves more fully into the YouTube and MySpace era."
They also want to speed up plans to switch recruitment advertising from press to online, after a pilot scheme revealed savings of up to 80 per cent.
Although some press ads will continue, they will be smaller and refer people to government websites. Ministers say the change will apply to senior but not junior posts because not everyone has access to the internet.
Brown aides insist any changes are designed to improve the efficiency of Whitehall - not to make it more propagandist. Officials have been kept in the dark about details of the proposed changes. "We don't know what to expect," one said.
The Tories, meanwhile, challenged Brown to cut the Government's ad budget. Mike Penning, a Tory MP, said: "If Brown is serious about giving up spin, he will call a halt to the millions of pounds of taxpayers' money being spent on propaganda. The Government should also switch spending on campaigns for Brown's pet projects like tax credits on to campaigns that work such as drink driving and road safety."
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