Chancellor is in the "last chance saloon" as she battles furious Cabinet colleagues in the run-up to spending announcements which are expected to impose huge cuts for years to come. One veteran Labour politician and former minister said: "If this goes wrong then either or the Prime Minister will have go to, and it won't be the Prime Minister."

A Whitehall source complained the Chancellor is "trapped by rules she made herself" which require day-to-day spending to be funded by revenue such as taxes without requiring borrowing. It means departments face cuts in the Spending Review to be announced on June 11, when will set out departmental budgets up to 2028-29.

Richard Fuller, Shadow Chief Secretary to the Treasury, said: "Rachel Reeves is completely out of her depth. Addicted to borrowing she has hiked taxes to record levels and is driving inflation in the wrong direction. We are all paying the price for Labour's economic incompetence.

"Given her dire record, it's no wonder she's now drinking in the last chance saloon with even her own Labour cabinet colleagues looking on with alarm."

While total Government spending will rise, the extra cash will not be enough to fund planned increases in defence, health and childcare. It means "unprotected" departments are threatened with real-terms cuts, with policing, the environment and some education funding all in the firing line.

Think tank the Institute for Fiscal Studies has predicted that schools could face cuts of £2 billion in government funding while sources at the Department for Environment, Food and Rural Affairs revealed that funding for Environmental Land Management schemes, currently £1.8 billion, could be slashed. National Farming Union President Tom Bradshaw said: "If this story proves to be correct it will be another blow, not just for farmers and growers, but for the viability of nature friendly farming and for the environment."

Deputy Prime Minister Angela Rayner, who visited a new housing development in Oxfordshire to announce plans to support small business housebuilders, has been pushing for more funding to ensure the Government achieves its aim of providing 1.5 million additional homes.

Ms Reeves has been keen to cut the costs of welfare and support for the elderly, which comes to more than £360 billion including the state pension. But ongoing rows over winter fuel means-testing, cuts to disability benefits and the two-child benefit cap highlight the enormous difficulty of getting spending down.

Concerns about these were raised at a meeting of Labour's National Executive Committee (NEC) last week, attended by Ms Rayner and party chair Ellie Reeves, sister of the Chancellor, NEC member Ann Black said in a written report that she highlighted "unpopular national decisions, led by withdrawing most winter fuel payments three weeks into government. Keir Starmer's apparent rethink has left pensioners unsure about who will now get it back and when."

But a former Labour Minister insisted: "You have got to cut back on welfare spending. The question is, what are your priorities? You can't do it all at once. They have probably tried to take on too much in one go."

One Labour MP predicted Ms Reeves would be gone before she has a chance to deliver her planned Budget statement in the autumn. The MP said about the Prime Minister: "I am surprised he has not reshuffled his Cabinet yet. He has to reshuffle."

But they also accused Sir Keir and his advisers of failing to understand that politics has changed since the last time Labour was in power with Tony Blair as Prime Minister. The Labour MP said: "People in Number 10 are playing by the Blairite pay book. They don't understand that the centre-ground has shifted and everything has moved right-wards."