Many thanks folks for all your thoughtful and helpful advice.
Whirlybird - I reckon I was trying to hide it all from my instructor, I suppose I just wanted the feeling to go away and not be a factor in my training. We have discussed it now and the plan is to go up to 5000ft and glide back down. I'm actually looking forward to it but I'll have to practice my deep breathing exercises !
It is strange how many pilots are afraid of heights. My instructor said that he has problems on ladders etc. While we were having our chat, sitting in the parked aeroplane, a helicopter flew over. I was amazed to hear him say, as he pointed at it, "You'd never get me up in one of those things" ! (Thought you might like that Whirlybird)
flying shrink - nice to hear some professional advice. I'll keep at it and hopefully it will never become a panic state.
It will break my heart if this upsets my flying, I still can't see how I can enjoy it if I'm nervous or worried. Only time will tell I suppose.