John Rentoul: It was quite a double act: the young, smiling one and the old, growling one. But it's over

The fairy tale has come to an end. It was one of the best-known stories of British politics for a decade. John Prescott, secondary modern boy made good, trade-union firebrand who came in from the left to make the pragmatic compromises needed to lend a rootless prime minister his loyalty and Labour movement credibility. What a successful combination Blair and Prescott were: mod and trad, middle and working, yin and yang.

Blair saw how the complementary opposites would work when his co-creator of New Labour did not. Gordon Brown wanted Margaret Beckett to continue as deputy leader of the party after John Smith's death.

What Brown saw was the touchy opponent of Neil Kinnock's attempts to modernise the Labour Party. Prescott was a good hater of the modernisers. I remember interviewing him about the Maastricht Treaty in 1992 when he took off his microphone and stood up. "I'm not having this; I'm 54, I don't have to put up with this," he said after I had continued to ask him about the single European currency ("I'm not a fan of the single currency, no").

Blair saw something else: a yearning to be liked, respected, at the heart of things. The two had worked together on plans to democratise the trade union block vote. Blair was quick to realise that behind the improvised syntax and Mr Angry persona worked a good political mind. I should have realised, too: Prescott only got up to storm out of my interview when the camera operator stopped to change the battery. By the time the camera was running again, I had agreed not to ask any more questions about the single currency.

For 10 years, the Blair-Prescott partnership worked. In government, Prescott proved a good committee chairman, and ministers say that he is good at smoothing out their quarrels. But he has been a weak departmental minister, as last week's report on his demoralised staff confirmed. More importantly, for a long time he was Blair's shield against those in the Labour Party searching for someone to betray them. Whenever Blair took a mallet to Labour's idols, Prescott would say that he shared the party's concerns, but that the leader had to be supported because there were elections to win, Tories to fight, traditional values to be preserved in a modern setting. But it is all over now.

What is curious is how little noticed this change has been. It has long been Westminster wisdom that, should Prescott turn against Blair, the Prime Minister would be finished. But he has turned. The breach occurred two years ago. And the Prime Minister is not only not finished, he has been re-elected for a third term.

The breakdown happened in the spring of 2004 when Blair changed his mind about standing down in Brown's favour before the last election. As the witness to Blair's declaration of intent to Brown, Prescott regarded himself as the guardian of the party's interest in managing the transition. "My job is to do what is helpful to the party by getting them going in the same direction," he said of Blair and Brown at the time. The key to understanding Prescott is his loyalty to the party. For a long time that meant loyalty to Blair, which was unstinting until he came to the view that the party would do better under Brown.

His loyalty to the party means that he will not be explicit. The conventional wisdom is true to the extent that he could damage Blair grievously if he said that Brown should take over as quickly as possible. But that would also damage the party. What he has done, though, is damaging enough.

For the past six weeks the Prime Minister and his deputy have disagreed publicly about a policy they both describe as "fundamental". Prescott will be remembered for many things, but the words that will be inscribed in the dictionaries of political quotations, if not on his grave, will be those of his interview with Susan Crosland in which he described the prospect of schools becoming good schools as a "great danger". A sentence thrown at Blair by David Cameron in the Commons last week.

Of course, Prescott has been unfairly mocked. As always with him, we know what he meant. He meant that schools might take the short cut to becoming good, namely by creaming off the "good" pupils and letting other schools sort out the rest. But his unfortunate phrasing did accurately convey the weakness of the rebel argument. As Blair said three weeks ago, the sharp elbows of the middle classes "cannot be a reason for not creating more good schools". Last week the Prime Minister let rip, paraphrasing Prescott three times in his monthly news conference. "When people say this extraordinary thing about, 'if you get a good school, the problem is people want to go to it'," he said, "you will never explain that to the British public, quite rightly."

This is serious. It was, after all, Margaret Thatcher's disagreement with her Deputy Prime Minister, Geoffrey Howe, that triggered her fall. Unexpectedly, however, it is Prescott who is damaged this time. His public disagreement with Blair has exposed his weakness rather than his strength. He tried to use his "nuclear option" - in a tactical and limited strike - and it hasn't worked. This is a risky prediction to make, but it is possible that the schools rebellion has peaked now. Labour MPs see that Blair will not suffer from a revolt (he is off, after all), but that the party will. One gloomy Blair loyalist took some comfort last week from the fact that, as he put it, "the coffee is beginning to percolate". The smell of compromise is in the air.

The other sign of Prescott's waning influence is that, having "gone over" to Brown's side, he can no longer be the honest broker of the Blair-Brown relationship. That role has, since the general election campaign last year, fallen to Alastair Campbell. Like Prescott, Campbell's primary loyalty has always been to the party, and he persuaded Blair and Brown to work together during the election. Over Christmas, he helped negotiate yet another "understanding" between them. Who knows if he was involved in Brown's decision to talk to The Sun last week to give unspecific but strong support to "education" and "reform"? But it was the kind of media operation in which Campbell excels.

This is not how the fairy tale was supposed to end. Prescott, the wise courtier above and beyond the cares of princes, was supposed to oversee the kingdom's deliverance through turbulence into safety. But he is no longer a power in the land. He has written himself out of the script before the happy ending.