Hundreds of council workers embroiled in a dispute with their employers over a proposed new pay system and conditions began a three-day strike yesterday.

The action by about 1500 employees at Argyll and Bute Council immediately caused disruption to transport systems and public services.

Ferry services were cancelled and some offices had to shut.

Unions representing the workers said they decided to take industrial action because talks with the local authority had broken down.

Unison and Unite are angry over a proposed pay and grading structure the council wants to introduce.

They claim this could lead to its members losing between £5000 and £6000 a year.

Last night hopes of a breakthrough in the dispute seemed remote with the sides no nearer to reaching agreement or agreeing to further talks.

Donald Brown, Unison Argyll branch chairman, said that the strike was "solid".

But, according to the council, services were "not overly affected". The unions had agreed to exemptions for ferry services, piers and winter maintenance where the emergency services make a specific request.

However, Caledonian MacBrayne's Gourock to Dunoon service was off because of the council-owned pier at Dunoon.

The Western Ferries was still operating.

The dispute was felt particularly badly in small islands such as Luing and Easdale that rely on council-run ferries which didn't operate at all.

One Easdale resident, Tina Jordan, said: "We can do without this extra loss of the ferry. We haven't had any mail. It directly affects island life. In my case I have to get to work tomorrow and have a hospital appointment on Thursday."

On Bute, the Wemyss Bay to Rothesay service was off because the council owns the island pier, so Bute was being served only by the Colintraive to Rhubodach service, where the ferry carries only half the cars.

Argyll and Bute Council said it had managed to reach agreement on public holidays, pay frequencies and working time arrangements, but had hit a stumbling block after the unions requested the continuation of time-and-a-half for basic hours on a Saturday and double time on a Sunday.

Council leader Dick Walsh said: "We have made every effort to secure a collective agreement with the trade unions and made substantial concessions in a number of areas."