Ministers and MPs think that the youthful members of the No 10 Policy Unit are too callow and too powerful.

"The teeny-boppers", John Prescott called them, conjuring up an irresistible image of scenic youth jiving in No 10. More evocative than accurate, as the Deputy Prime Minister later conceded. The staff of the Downing Street Policy Unit range from their 20s to their 50s - and they are, by definition, serious-minded people.

Prescott explained later that he meant "to epitomise a mood", but his irritation with meddlesome wonks will have resonated around Whitehall. The policy unit gets the blame for all sorts of evils, from the watering down of this week's transport white paper to the absence of a policy on mental health.

The Downing Street dozen - 11 political advisers and one civil servant - have far more face-to-face contact with Blair than the average minister. They see cabinet papers, they attend cabinet committees. "If the Prime Minister wants something to happen, you are his foot soldier around Whitehall," explains the Tory MP Damian Green, who was a member of John Major's policy unit. "That's a powerful position."

It is one thing to be resented as powerful and anonymous; it is another to be dragged into the spotlight by Derek Draper. The unit will have been collectively riled to see three of its members - Geoffrey Norris, Liz Lloyd and Roger Liddle - publicly identified as friends to whom Draper had easy access.

This little platoon of brusque young men and middle-aged SDP returnees puts a premium on loyalty and discretion. Officially, they do not speak to the press (a genteel fiction). Norris featured in recent coverage as a sinister silhouette, for the simple reason that no newspaper can find a photo of him.

Under Margaret Thatcher, the policy unit was an ideological vanguard, where right-wingers such as John Redwood and Oliver Letwin plotted privatisation and invented the poll tax. Major's team, run by the journalist Sarah Hogg, invented the council tax and christened the Citizen's Charter over a latenight Westminster curry.

Blair's boys (apart from Liz Lloyd, all the political appointees are male) will not get a chance to shine until it's time to draft the manifesto for the next election. David Miliband, the 33-year-old head of the unit, frets that too much time is spent fire-fighting and not enough thinking about the future. He organised the recent No 10 seminar on the Third Way, where his staff unnerved guests by sitting in a row along the back wall.

Miliband's newest recruit, the former Observer columnist Andrew Adonis, is supposed to devote part of his week to developing an "opportunity agenda" for a second Blair term. But most of No 10's time is taken up with day-to-day surveillance duties: ploughing through a departmental document here, querying a controversial policy there. One Tory minister used to call Damian Green "the spy in the cab".

Labour MPs, just like their Tory predecessors, complain that these people have never done anything, certainly not "a proper job". Most of the younger ones have worked only as researchers for MPs or think-tanks, though several have been councillors and Geoff Mulgan set up his own think-tank - Demos - from scratch. But compared to the average MP, they lead a pretty sheltered life. By contrast, the new Social Exclusion Unit has recruited people with wider experience, including a probation officer and a policeman.

In fact, neither the teeny-boppers' youth nor their limited outlook is anything new. In choosing staff who are mainly young, mainly middle class, mainly Oxbridge and mainly male, Blair is following past practice. Oliver Letwin, now a Conservative MP, was 27 when he went to work for Margaret Thatcher's policy unit. His only job outside Cambridge had been advising the education secretary, Keith Joseph.

The Prime Minister wants people he feels comfortable with, people he can trust. Seven of the 11 policy unit staff worked for him in the laager of opposition, where limited cash meant employing cheap young graduates who could find friends to replace them when they left. (This is how Blair came by James Purnell, Liz Lloyd and his former press aide, Tim Allan, known collectively as the "Godalming mafia".) Of the remaining three, Robert Hill had worked for the party and Mulgan for Gordon Brown, while Liddle was umbilically linked to "the project" as a friend of Peter Mandelson.

Even though Blair can now pay bigger bucks - special advisers get between [pounds]24,000 and [pounds]73,000, roughly related to previous salary - he preferred to re-hire former staffers such as Purnell, who would have been earning about [pounds]60,000 in his pre-election job as the head of corporate planning at the BBC.

The Labour leader added three extra staff to the Tories' seven. But he has dropped the idea of creating a full-blown Prime Minister's department, opting to beef up the Cabinet Office instead. So the overstretched members of his mini-think-tank - just emerging from the tunnel of the Comprehensive Spending Review - will have to struggle on with their peculiar portmanteau briefs. Lloyd is supposed to cover agriculture, the environment and home affairs. Hill, whose background is in local government, has to cope with health as well: two huge topics for Labour. One result is that a document on care for the mentally ill, due out in April, has been delayed until the autumn. Hill wrote the first draft himself, leaving health department officials in the dark. "It appears that the whole driving force for the government's mental health strategy is the No 10 Policy Unit," says a well-informed observer.

Often the degree of interference is inversely proportional to the "reliability" of the minister concerned. With Jack Straw so instinctively "on-message", there is no need for Lloyd to reach for the tiller. But Norris intervenes routinely at the Department for Trade and Industry, where Margaret Beckett is hard-put to match Blair's desire to please the business community.

These prime ministerial tactics have a history. When Tony Benn was industry secretary, Harold Wilson assigned him a No 10 "Benn-watcher" to monitor any attempts to implement manifesto commitments on planning and public ownership. Conversely, some ministers are regarded as No 10's voice in their department, such as Stephen Byers at education and employment, who echoes the PM's distrust of local education authorities.

What bothers MPs and activists is the suspicion that the policy unit reinforces their leader's right-wing tendencies. It contains no fewer than three former members of the SDP: Liddle, Derek Scott and Adonis, who only rejoined Labour in 1995. Norris, who annoyed Prescott by objecting to this week's transport white paper as "anti-car", took the CBI's side in negotiations over the right to trade union recognition. Adonis turned up at a recent Institute of Economic Affairs lecture by the chairman of the Edison Project, a private US company that runs schools for profit.

Not all policy unit positions are so predictable. Hill displays an antipathy to private healthcare that upsets the insurance companies. Mulgan's ideas on tackling social exclusion are among the most progressive in the government. Miliband was involved, through the Social Justice Commission, in developing the minimum income guarantee for pensioners just announced by Harriet Harman. But the point about the teeny-boppers is that they perform a psychological function. They allow people to be angry about Blair, instead of being angry with Blair. They are a proxy target, just as Peter Mandelson used to be.

As for John Prescott, he got his congestion charges past a protesting policy unit. Now the Deputy Prime Minister looks like a radical green instead of a cautious compromiser. He ought to be grateful.

WHO'S WHO IN TONY'S TEENYLAND

DAVID MILIBAND, 33. Head of policy unit

Finally confirmed in the top job after an inconclusive search for a business high-flier to do the job. Modest son of Marxist academic Ralph, brother of Gordon Brown adviser Ed. Joined the new leader's team in 1994 from the IPPR, where he was secretary to the Commission on Social Justice. Oxford graduate; Blair's ambassador to the academic community. Football fan (Arsenal); creative cook; genuinely enjoys political discussion. Control-freak tendencies starting to surface.

LIZ LLOYD, 27. Agriculture, environment and home affairs