Hackney is increasingly expected to become the first to have an outside private team sent in. But if Mr Blunkett adopts that course, a contractor is unlikely to be announced before April when the approved list is completed.
Meanwhile the LGA met Hackney's three political group leaders in a last-ditch attempt to avoid a private takeover which would set a damaging precedent for local government.
Hackney has tried to pre-empt a takeover with its own overtures to the private sector. It is considering contracting out its education, finance and personnel units, and the neighbouring Corporation of London authority is brokering talks with City firms on starting an action zone.