The government's most high profile case against a former Enron executives was thrown into question after a plea agreement with the wife of the company's former chief financial officer crumbled. Lea Fastow withdrew her "guilty" plea to tax charges after a federal judge balked at sentencing her to five months in prison, as prosecutors recommended under an agreement reached in January.

Ms Fastow's move cast doubt on a related deal by her husband, whose co-operation helped the government to bring charges against Jeffrey Skilling, the company's former chief executive. The agreement was part of a broader deal that convinced Andrew Fastow to plead guilty and co-operate with prosecutors investigating the collapse of Enron. In return he had been promised a maximum 10 years' imprisonment.

Mr Fastow was indicted on nearly 100 counts, including conspiracy and fraud, that could have landed him many more years in prison. The length of Ms Fastow's sentence was central to the plea bargain. The couple insisted her sentence be limited so at least one of the parents would be at home to care for their young children.

Yesterday Judge David Hittner bounded for what prosecutors and the defendant thought would be her sentencing. But he cut them both off from making their case, and set jury selection for June 2 for a trial in a new location in Brownsville, Texas. Lawyers observing the case were divided s to the consequences. Some believed Mr Fastow still had great incentive to co-operate with the government because he was facing decades in prison if he did not.

However, others said even if Mr Fastow could not withdraw his own plea, he could limit his co-operation with prosecutors. Mr Fastow's lawyers declined to comment. "This is a striking development", said Chris Bebel, a former prosecutor now in private practice. "If this causes Andrew Fastow to withhold further co-operation, the strength of government's case against [former Enron chief executive Jeff ] Skilling will be dramatically reduced."

Yesterday's debackle highlights a broader tension between federal judges, prosecutors and Congress over sentencing powers. Judges have complained in recent months that Congress and the Department of Justice have chipped away at their discretion to impose penalties by strengthening sentencing guidelines.

Those guidelines led to an unprecedented 24 year sentence last month for a former Dynegy executive, Jamie Olis, making it difficult, some believe, for Judge Hittner to accept a light sentence for Mr Fastow.