David Cameron: I still have full confidence in George Osborne

She said the Government would now bring forward alternative proposals to the cuts to Personal Independence Payments (PIPs) - announced by Mr Osborne in the Budget on Wednesday - in the Autumn Statement towards the end of the year.

Mr Duncan Smith stormed out of the Government on Friday, complaining that he was again being forced to make cuts to the most vulnerable while Mr Osborne was handing tax cuts to the better-off.

Downing Street flatly rejected suggestions that Mr Cameron was happy for the Chancellor to cut welfare payments to the less well-off as they did not vote for the Government.

"He doesn't accept that. We don't accept that. This Government has been very clear that we want to focus on how we as a country live within our means while making sure that we are supporting those who are most vulnerable," the Prime Minister's spokeswoman said.

She added: "He remains a compassionate Conservative."

She said the decision to wait until the Autumn Statement - usually held in November or December - to set out alternatives to cutting PIP meant they had a breathing space in which to deal with the issue.

"We have now got the time to look at how we address this issue and look at how we take it forward," she said.

Labour leader Jeremy Corbyn said Mr Osborne should be "considering his position" following the unravelling of his Budget plans in the wake of a barrage of criticism from Tory MPs.

"His Budget simply doesn't add up and it unravelled within hours of him presenting it. This isn't the first time a George Osborne Budget has unravelled," he told BBC1's Breakfast programme.

"It seems to me we need to look at the very heart of this Government, at its incompetence, at the way it puts forward proposals that simply don't add up and expects the most needy in our society to take the hit for them."

With Conservative MPs in turbulent mood, No 10 sought to defuse potential Commons revolts over the so-called "tampon tax" and VAT on solar panels.

Mr Cameron's spokeswoman said ministers would not oppose amendments to the Finance Bill on Tuesday scrapping VAT on women's sanitary products and blocking an increase in the rate on solar panels.

The amendments were supported by some Eurosceptic Conservatives determined to embarrass the Government over the role of the European Union in setting VAT rates ahead of the EU referendum in June.

However, Mr Cameron's spokeswoman said there was no need for the Government to oppose as they had won an agreement in Brussels allowing the UK to zero-rate sanitary products while consultations on solar panels were ongoing.

Cabinet minister Greg Clark issued an appeal for Conservative MPs to "come together again" and to avoid "scrapping".

The Communities Secretary said Mr Duncan Smith had previously been working "hand in hand" with Mr Cameron and Mr Osborne on the welfare changes.

"I don't think it should be civil war at all because actually Iain and the Prime Minister and the Chancellor have worked very successfully together over the years, for example, to get more people into work than ever before, to have fewer children in workless households," Mr Clark told ITV's Good Morning Britain.

"We need to come together again to continue that important work."

Commons Speaker John Bercow has granted shadow chancellor John McDonnell an emergency question calling on Mr Osborne to make a statement explaining the changes to the Budget.

It was not immediately clear if the Chancellor would answer it himself or leave it to one of the other Treasury ministers.

Former Tory leader Michael Howard said that Conservatives needed to "calm down" and rally behind Mr Cameron and Mr Osborne.

Lord Howard told BBC Radio 4's Today programme: "I would be telling my colleagues if I was still in the House of Commons to calm down, to remember that it's less than a year since the Conservative Party won a general election under David Cameron's leadership, that one of the main elements in that election victory - probably the main element - was our economic recovery during the five years leading up to that election, for which George Osborne as Chancellor of the Exchequer deserves an enormous amount of credit.

However Conservative backbencher Sarah Wollaston said Mr Osborne was facing "very serious charges" and needed to return to Parliament to "revise" his Budget decisions.

She said that ministers should reconsider their commitment to protect payments to better off pensioners rather than hitting the disabled.

"I don't think there will be as much resistance to that as people might imagine, because inter-generational fairness matters to older people as well, and to wealthier older pensioners," she told Today.

Former Tory leadership contender David Davis said Mr Cameron should consider moving Mr Osborne to another post - such as foreign secretary - if he wanted him to succeed him as prime minister.

"If the leadership election were to be in the next six months I think he'd be sunk without trace. It doesn't kill him for ever but I think at the moment it is quite harmful," he told BBC2's Victoria Derbyshire programme.

"Very, very few people go straight from being Chancellor to being Prime Minister and when they do it's not always a success - Gordon Brown was the last one.

"George Osborne is a political talent - there is no doubt about that - and if at some point he moves somewhere else that actually might be in his own interest."

Mr Osborne will not respond to the urgent question. Treasury minister David Gauke will take on the mantle in his place.

The Chancellor will take the unusual step of closing the Budget debate tomorrow in the Commons in an effort to shore up support for his financial statement despite the gaping hole left by the u-turn on PIP.

Former Business Secretary Sir Vince Cable said Mr Cameron's "fingerprints are all over this just as much as George Osborne".

He told BBC Radio 4's World at One programme: "It was his personal refusal to tackle issues like the tax benefits of very wealthy pensioners which has forced them into attacking the disabled and the working poor."

Sir Vince said Mr Cameron would "probably not" be able to survive getting rid of Mr Osborne.

"They are Siamese twins and they do work very closely together," he said.

"I think they either hang together or they hang separately."

Skills minister Nick Boles said Mr Cameron is "by far and away the most popular Conservative in the country".

"There have always been a few people who are not supporters of the Prime Minister, there are in every party," he said.

"He has the support of the overwhelming majority of the parliamentary party."

Conservative MP Nadhim Zahawi urged party members to stop briefing against each other.

"Blue on blue attacks never look good. People don't vote for divided parties," he told the programme.