The Scottish executive has embarked on a collision course with Westminster after a parliamentary rebellion forced the first minister, Henry McLeish, to offer free long-term care for all Scotland's pensioners.

Minutes before a vote on the issue in the Scottish parliament yesterday, the executive announced a dramatic policy u-turn and said it would implement plans to fund long-term care for all pensioners.

Scottish pensioners will now get free personal care, including bathing, changing dressings and assistance with eating - services that pensioners in England and Wales will continue to pay for.

The government thought it had repaired its reputation with pensioners by promising to increase pensions faster than inflation this year, but the policy split between London and Edinburgh may make it harder for Labour to garner the grey vote at the forthcoming election.

The decision to implement the care package, at a cost of £110m a year, reverses the announcement by Mr McLeish just a day earlier when he had offered a scheme that stopped short of the universal free care recommended by the Sutherland royal commission.

Facing certain defeat after a stormy debate on the issue yesterday, the parliament minister, Tom McCabe, revealed the free care in an emergency statement.

The u-turn had been brought about by the prospect of a cross-party rebellion which threatened to see Labour's LibDem coalition partners desert them to join an axis of SNP and Conservative MSPs and reject the compromise care package.

The decision opens the biggest policy rift yet between Holyrood and Westminster. Mr McLeish, who had hinted when he took office that he wanted to implement the Sutherland recommendations in full, was said to have been pressed by Downing Street not to offer a vastly superior care package in Scotland because of the problems it would create, not least raising the spectre of care being decided by postcode.

The issue is highly emotive and campaigners are unhappy with the existing deal in England and Wales where nursing care is free but personal care is means tested.

Paul Burstow, Liberal Democrat health spokesman, said the decision in Scotland "would mean that a Scottish pensioner choosing to move into a nursing home in England would get free personal care, but the English person in the next room would have to pay for it. This is like the tuition fees anomaly all over again."

About 40 Labour MPs have signed a Commons motion calling on the government to reconsider its stance.

The charity Help the Aged said: "We can't have a system that gives better care for people in Scotland than in the rest of the UK. That goes down the road of creating a new postcode lottery. The NHS is meant to provide care at the point of need throughout the UK and should not be dependent on where people live."