The Tories appeared to admit that swingeing cuts could see public spending fall to 1960s levels - when Alec Douglas-Home was Prime Minister - following Labour accusations they would really dip to those not seen since 1938.

Reductions planned for the next three years will far outstrip those seen in any of the last five, according to figures published alongside the Budget.

Labour denounced the proposals as "extreme".

George Osborne has previously rejected suggestions he wants to bring spending levels back to the 1930s, before there was an NHS.

He said in his Budget speech that instead they would return to what they were in 2000 - when former Labour Prime Minister Gordon Brown was the Chancellor.

But shadow Chancellor Ed Balls said projections from the independent Office for Budget Responsibility (OBR) showed that on one measure "on day-to-day services" they would return the UK to 1938 levels.

He also accused the Tories of trying to hide the fact by pulling the cuts forward by a year.

In response aides countered that the graph showed they would fall to 1964 levels.

The Tories say the figures don't take into account other savings they plan to make, including wiping billions from the welfare budget.

Earlier, Mr Osborne had said that the sun was "starting" to shine on the economy, announcing plans to end his austerity policies a year earlier than planned.

He also said that new figures showed that the average person would be better off in 2015 than they were when the Tories came to power in 2010, a challenge to Labour's claims of a "cost of living crisis".

Labour hit back accusing the party of "making up" a new definition to fiddle the figures and try to fool voters.

Deputy First Minister John Swinney said Scotland would see another £12 billion of cumulative cuts in real terms over the four years to 2019.

He said: "If we are to believe the Chancellor that the economy is making such a successful recovery, then there is no justification for the destructive cuts that impact on the most vulnerable in society.

"That tells you everything you need to know about the values and priorities of this Chancellor."

Scottish Labour leader Jim Murphy said the Tories offered "more cuts and deeper austerity".

Union leaders said that claims of rising living standards were "not one that many will recognise".

The GMB union accused Mr Osborne of planning "draconian cuts in services that we rely on for a civilised way of life".

Grahame Smith, Scottish Trades Union congress (STUC) general secretary, said the Budget "was clearly designed to meet the political challenge of the forthcoming general election rather than the significant economic and social challenges facing the UK.

"The windfall provided by falling inflation should have been reinvested in vital infrastructure to further embed the recovery and support good jobs, not pay down debt that is currently being serviced at historically low interest rates.

The pain of the massive spending cuts scheduled for the next three years will not be alleviated by the Chancellor's commitment to increase public spending in the last year of the next Parliament. "

Secretary of State for Scotland, Alistair Carmichael, said the Budget was a step forward for Scotland in the wider journey to economic stability over the past five years.

"It gets the important things right, with a focus on helping create a fairer and more generous personal tax system which will benefit thousands of people in Scotland and giving a helping hand to some of our key business sectors, securing jobs and prosperity for the future," he said.

"This progress has been hard-won by this Government and builds a strong base for Scotland's economic future as part of the UK."

SNP Deputy Leader and Treasury spokesperson Stewart Hosie claimed that Mr Osborne has blown his last chance to address the real needs of the people of Scotland.

"(He) could have delivered a budget focused on delivering economic growth by tackling inequality.

"He has not - he has decided to continue with his utterly failed austerity agenda.

"It is Osborne's Tory led coalition that have made hard working families and the poorest pay the hardest for this austerity.

"The Scottish Government has outlined a sustainable credible alternative to austerity - which allows for a more responsible reduction in the deficit - whilst providing real terms growth in public spending."

Assessing the Chancellor's plans, Anton Colella, the chief executive of the Institute of Chartered Accountants in Scotland, said: "This draws the battle lines for the election. "On the one side, the claim of national recovery and growing prosperity and on the other the claim of more austerity and a Government ignoring real people's lives.

"On the whole it seems a good Budget for business but the people will decide at the ballot box whether it's done enough for them."