Downing Street is blocking moves to include a ban on smoking outdoors in the upcoming Tobacco and Vapes bill amid fierce opposition by the hospitality trade.

No 10 officials privately believe that banning people from lighting up in pub gardens is “an unserious” policy and is not backed by good evidence showing that it harms non-smokers.

Differences of opinion in government about an outdoor ban, and uncertainty about the potential risks of pressing ahead with it, lie behind the delayed publication of its long-promised landmark bill. It will make the UK the world’s first country to progressively raise the age at which people can buy tobacco until no one can do so legally.

Keir Starmer has insisted that he is ready to face down critics of his drive to eradicate smoking because action is needed to reduce the 80,000 annual death toll from Britain’s biggest killer.

But No 10 was said to be “spooked” by strongly worded warnings that job losses and pub closures will result if smoking in some outdoor settings is outlawed, despite the prime minister’s repeated insistence that “nanny state” jibes will not stop him taking robust action to improve public health.

The Guardian understands that Morgan McSweeney, the prime minister’s chief of staff, is not keen on proceeding with it, despite Starmer’s previous refusal to rule it out.

“It is an unserious policy. Nobody really believes smoking outdoors is a major health problem,” one Downing Street official said.

The trade body UKHospitality said the ban threatens “serious economic harm to hospitality venues” and would hit nightclubs, hotels, cafes and restaurants as well as pubs.

The British Beer and Pub Association said the plan was “deeply concerning and difficult to understand” and “yet another blow to the viability of our nation’s vital community assets”.

Ending smokers’ ability to go outside a pub to have a cigarette, for example in a beer garden, “would have a devastating impact on pubs already struggling” with rising costs, it claimed.

A second No 10 official confirmed it has been blocking the plan as a direct result of such concerns. While smoking may be banned in some outdoor spaces, the Tobacco and Vapes Bill is unlikely to include one covering hospitality venues because “the evidence is too thin”.

Lucy Powell, the leader of the house, is also understood to have urged No 10 to ditch the outdoor ban.

However, health experts have voiced concern about the hold-up in publishing the legislation and urged ministers to move ahead with an outdoor ban to increase the chances of Britain becoming “smoke-free” – defined as only 5% or less of the population smoking – by 2030.

“It’s concerning that delays to the tobacco and vapes bill are rumbling on. The clock is ticking and it’s time for the UK government to make good on their promise to tackle the harms of tobacco,” said Michelle Mitchell, the chief executive of Cancer Research UK (CRUK).

Exposure to secondhand smoke outdoors does harm the health of non-smokers, she insisted.

“The health risks of tobacco – which contains over 5,000 chemicals – are indisputable, and smoking outside is no exception.

“Breathing in other people’s tobacco smoke is harmful and it puts people at higher risk of smoking-related diseases. It can cause lung cancer, heart disease and stroke.

“Most exposure to secondhand smoke happens in the home but smoke can also build up in the air outside and can drift from outdoor to nearby indoor spaces and build up there too.”

Hazel Cheeseman, the chief executive of Action on Smoking and Health, said: “Given the commitment in the king’s speech to legislation it has been concerning to see little public progress. Outdoor smoking restrictions are important to debate and could help more people avoid harms from second-hand smoke and help those quitting smoking to avoid relapse.”

Streeting told MPs last week that, when it returns, the bill will be stronger than the original version produced by Rishi Sunak’s government.

On Monday he said that it will be published before Christmas. But he also conceded that “there’s always those choices and trade-offs about the benefits [to] the public health … and then potential downsides that people raise, either believing that it’s too far an encroachment on people’s lives and liberty or that it might impact on businesses”.

The Department of Health and Social Care said it did not comment on leaks. But a spokesperson added: “We are determined to protect children and non-smokers from the harms of second-hand smoking.

“We’re considering a range of measures to put us on track to a smoke-free UK.”

Meanwhile, 350 young adults a day have taken up smoking in the 100 days since Labour included the Tobacco and Vapes Bill in the king’s speech, new CRUK-funded research found. About 35,000 18- to 25-year-olds have done so, according to the study by University College London researchers.