Labour fear losing their last four remaining county councils

That is what the FT is reporting:

"Harriet Harman, deputy Labour leader, and John Healey, local government minister, gave a downbeat prognosis to a private gathering of the parliamentary Labour party. MPs were told there was a high chance of losing some or all of Nottinghamshire, Staffordshire, Derbyshire and Lancashire councils... The county councils with the slimmest Labour majorities are Nottinghamshire with 38 Labour councillors to 25 Tory and Staffordshire with 32 Labour to 27 Tory."

It is also possible, of course, that Labour is playing an expectations management gain.

Bob Neill MP questions Labour's moves to merge 2009's local and European elections

Following reports that the Government is planning the 'desperate move' of combining the local and European elections next spring, Shadow Local Government Minister Bob Neill questions Brown's motivations and suggests that holding two elections on one day could be chaotic.  Local elections are held in May each year but the Europe-wide elections every five years, in June.  Paul Waugh of the London Evening Standard says Labour fears bad results:

"Labour faces the loss of Lancashire, Derbyshire, Staffordshire and Nottinghamshire County Councils to a Tory tide that will strike fear into the hearts of Labour MPs who hold crucial marginal seats in each area. Ironically, all the Labour counties were held in 2005 because the local elections that year were held on the same day as Tony Blair's general election victory."

Neill tells Waugh that Brown is 'clearly terrified of a bad beating' and that the postponement of the County elections is an attempt to delay speculation about his leadership in the short term and give more space for his fightback against the Conservative Party.

Neill also points to problems in the recent elections for the Scottish Parliament to suggest that combining different voting systems on one ballot paper can be confusing, and that having witnessed the chaos north of the border, first past the post and list systems should not share the ballot paper in English elections.