GEORGE Osborne is expected to remain Chancellor if the Tories win the General Election so that he can steer the UK through another referendum but this time on the Yes side.

Whitehall sources have indicated that the Treasury's key role in the UK Government's campaign to stop Scottish independence has helped persuade Mr Osborne to remain as Chancellor to lead the department in key negotiations with Brussels to help David Cameron secure the reforms he is seeking and then, if successful, campaign for the UK to remain in the EU in an in-out referendum before the end of 2017.

"The EU negotiations are all Treasury-related so it makes sense for George to run them," one senior source stressed.

Before William Hague's unexpected departure from the Foreign Office, it had been widely expected that, if the Tories regained power this year, then Mr Osborne would become Foreign Secretary. But as Mr Hague moved to become Commons Leader, Philip Hammond, the Defence Secretary, was promoted to fill his role at the Foreign Office.

However, Mr Osborne playing the pivotal role in any EU negotiations would put Mr Hammond's nose out of joint and could cause a major rift, particularly as the Secretary of State is seen as more eurosceptic than the Chancellor.

Last October, Mr Hammond raised eyebrows when he told MPs the Tory proposal of reform talks and then a referendum was "lighting a fire under the European Union".