The plans to scrap the basic rate of income tax from 19% to 20% have been scrapped.

In a statement today, the new Chancellor Jeremy Hunt revealed plans to reverse almost all of the tax measures announced in the growth plan three weeks ago.

He said: "No government can control the markets but every government can give certainty about the sustainability about public finances

"Although the Prime Minsiter and I are both committed to cutting corporation tax, on Friday she listened to concerns and confirmed we would not proceed with the cut to corporation tax.

"We will reverse almost all the tax measures announced in the Growth plan three weeks ago that have not started parliamentary legislation.

"So whilst we will continue with the abolition of the health and social care levy and stamp duty changes, we will no longer be proceeding with the cuts to dividend tax rates, the reversal of off-payroll working reforms introduced in 2017 and 2021, a new VAT -free shopping scheme for non-UK visitors or the freeze on alcohol duty rates.

"The Government's current plan is to cut the basic rate of income tax to 19 per cent from April 2023.

"It is a deeply held Conservative value, a value that I share, that people should keep more of the money they earn.

"But at a time when markets are rightly demanding commitment to sustainable public finances, it is not right to borrow to fund this tax cut.

"So I have decided that the basic rate of income tax will remain at 20 per cent and it will do so indefinitely until economic circumstances allow for it to be cut.

He said: "Finally, the biggest single expense in the Growth Plan was the energy price guarantee. This is a landmark policy supporting millions of people through a difficult winter. And today I want to confirm that the support we are providing between now and April next year will not change.

"But beyond that the Prime Minister and I have agreed it would not be responsible to continue exposing public finances to unlimited volatility in international gas prices.

"So I am announcing today a Treasury-led review into how we support energy bills beyond April next year. The objective is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need."

Following his statement, the Chancellor will address the House of Commons later today ahead of the publication of his full medium term fiscal plan on October 31.

The move will be seen as an attempt to reassure the financial markets after weeks of turmoil in the wake of former chancellor Kwasi Kwarteng’s £45 billion mini-budget tax giveaway.

The measures come as Ms Truss continues to fight to hold on to her leadership, with three Conservative MPs already breaking ranks to call on her to go.

Crispin Blunt, Andrew Bridgen and Jamie Wallis all called on the Prime Minister to quit on Sunday, while other senior figures within the parliamentary party expressed deep unease with Ms Truss’s leadership but stopped short of calling for her to go.

Mr Blunt was the first MP to demand her exit, telling Channel 4’s Andrew Neil Show on Sunday: “I think the game is up and it’s now a question as to how the succession is managed.”

Mr Hunt, who carried out something of a media blitz on behalf of the Prime Minister over the weekend, insisted that she was still in charge even as he diagnosed the need for a tough package of tax rises and spending cuts in order to steady the UK economy.

Penny Mordaunt also offered the Prime Minister her full support, using a piece in the Telegraph to warn that the UK “needs stability, not a soap opera”.

“It needs us to work with the Prime Minister and her new Chancellor. It needs all of us.”

Ashford MP Damian Green has also announced his support for Ms Truss . Speaking on Radio 4 Today programme, he said: “I think it is important that we don't have another leadership election campaign. I think the wider public would be entitled to look askance at that.”

“She is a pragmatist and has realised that her first budget did not work in spectacular fashion. So she is taking the sensible view that we should try something else.”

“It is apparent that the timing of the budget cuts was wrong and simply could not be accepted by the financial markets so you reset and have a more credible fiscal position and then get back to the serious work of building the economy. What is important to people is what is happening to their mortgage rates and their jobs.”

Asked if she had lost authority, he said: “I don’t agree. I think people… my parliamentary colleagues will take a view of individual measures.”