More than 60 Tory MPs last night were threatening to rebel against plans by Michael Portillo, the Secretary of State for Defence, to sell pounds 1.5bn of armed forces' married quarters.

The receipts from the sale are factored into the Chancellor's plans for tax cuts in the Budget and the cost of the beef compensation scheme. Mr Portillo last night made it clear he rejected Tory backbench protests.

Supporters of John Redwood denied they were behind the rebellion to undermine Mr Portillo's support on the right of the party, but the row could harm his chances in a Tory leadership contest.

A principal organiser of a Commons motion protesting at the sale, Julian Brazier, was a strong supporter of Mr Redwood. It was also signed by David Evans, the parliamentary aide to Mr Redwood, when he was a Cabinet minister.

"The purpose of this exercise is to get money for the Treasury. I haven't rebelled often, but I would be prepared to rebel against this," said Mr Brazier.

Tory MPs from both wings of the party signalled their opposition to Mr Portillo's plan, which was backed by his controversial special adviser, David Hart. Those signing the Commons motion included Sir Keith Speed, former defence minister, and senior members of the 1922 Committee of Tory backbenchers.

Labour was threatening to force a vote on the issue before the Commons goes into summer recess in late July, leaving Mr Major with the threat of a damaging revolt. "We will do everything in our power to defeat the Government and stop this mad scheme going ahead," said David Clark, the Shadow Defence Secretary.

The Labour leader, Tony Blair, said: "The reason this has been pushed through with such indecent haste is nothing to do with the armed forces. It is to do with the Chancellor's need to plug the hole in the nation's finances."

But the Prime Minister said: "It is a matter which has been under consideration for a number of years, to release resources to the Exchequer."

The sale was revived by Mr Portillo in the face of stiff opposition from Lord Bramall, the former chief of the defence staff, the Royal British Legion and the Army Families Federation.