A refusal to allow an independent Scotland to be part of a currency union with the UK would be "bonkers", the SNP's Stewart Hosie has insisted.

The party's Treasury spokesman at Wesminster intensified the war of words yesterday after Alistair Carmichael, Secretary of Stat for Scotland, rubbished one of the key platforms of tomorrow's White Paper.

He targeted the assertion that if Scots vote Yes next September, the new nation would not only retain the pound but seek to join the rest of the UK in a new currency union.

Speaking on the BBC TV's Andrew Marr Show, Mr Carmichael gave the clear indication that, by law, if Scotland broke from the UK, it would not only remove itself from the present currency union, but also disbar itself from using sterling.

"Public international law is very clear on this: that if you remove yourself from the United Kingdom, then you would remove yourself from all sorts of institutions and, yes, the pound would be one of them," said Mr Carmichael.

He also stressed a currency union would be impractical. "The fact is a currency union wouldn't work. It wouldn't work for Scotland, it wouldn't work for the rest of the United Kingdom.

"If you look at what happens in the eurozone you learn in fact the currency union there runs into difficulty because it doesn't have the fiscal , the economic or the political integration. Independence is about political disintegration, it's not about integration," he stressed, adding First Minister Alex Salmond needed to tell Scots what his Plan B is.

Yet Nicola Sturgeon, the Deputy First Minister, emphasising the 670-page White Paper, would be "reasonable, rational and responsible", claimed a currency union not only made "overwhelming sense" for Scotland but for the UK as well because Scotland was the second biggest export market for the rest of the UK after America.

Later, Mr Hosie, went further, arguing a refusal to allow ­Scotland to use sterling would "shred" the currency.

"The UK, or sterling zone, balance of trade deficit right now is £35bn a year; Scottish oil and gas exports are £30 billion. That would effectively double the sterling zone trade imbalance and shred the currency. That would be really silly." He claimed imposing barriers to trade with Scotland would "destroy at least tens of thousands of English jobs" and added: "That's just bonkers."

Meantime, Alistair Darling, who leads the Better Together campaign for the Union, denounced as "nonsense" what he said was the assertion by John Swinney, the Scottish Finance Secretary, that the SNP Government would "expect" the UK Government to agree to a currency union, if Scots voted Yes, because it was the proposal contained in the White Paper.

"If Scottish voters decide to break up the UK next September, the only certainty is that we will leave the United Kingdom," said the former Chancellor.

"The terms of the break-up will be subject to difficult ­negotiations," he added, noting: "The Nationalists know they cannot promise that we would keep the pound."

Mr Darling said this was why Ms Sturgeon had "threatened to default on Scotland's share of UK debt if the rest of the UK refused to create a currency union".

He said: "Just think what that means. Scotland would be a small country, presumably joining the euro, which had just sent a message to international lenders that we could not be trusted to honour our debts. What would that mean for our interest rates and our mortgage costs?"

The ex-Chancellor suggested the Scottish Government wanted to "present independence without a price".