Shadow chancellor George Osborne was fighting for his job last night as Labour threatened to beat the Tories to the punch on tax-cuts.

Shadow chancellor George Osborne was fighting for his job last night as Labour threatened to beat the Tories to the punch on tax-cuts.

Mr Osborne was accused of threatening a run on sterling after he claimed borrowing to fund tax cuts in the present climate could result in "collapse" in the value of the pound.

He also faced demands from major Tory donor Lord Kalms, a former party treasurer and founder of the Dixons retail empire, that he be replaced.

Although some senior Tories rallied round their beleaguered colleague party leader David Cameron was not among them, while news that Tory policy chief Oliver Letwin was being asked to craft a response to Labour's planned pre-Christmas tax giveaway further undermined Mr Osborne's position.

The row is seen as having upped the pressure on Mr Osborne amid criticism from within the Tory party of his response to the global financial crisis and controversial contacts with Russian oligarch Oleg Deripaska.

There were predictions that if the money markets opened this morning with a further slide in sterling, already at a six-year low against the dollar and all-time low against the euro, the shadow chancellor may have to resign.

Prime Minister Gordon Brown, returning from the G20 summit, stressed that politicians should not speak "irresponsibly" at a time of crisis, while the Chancellor, Alistair Darling, added: "All I would say is this, that a few weeks ago the Tories offered a bipartisan approach. Now that has clearly gone to the wind.

"At a time like this, this is when we at home and when we with other countries across the world should be working together, that is what people expect and that is what I intend to stick to."