Charles Clarke warns Brown over Budget

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Alistair Darling will deliver his first Budget against the backdrop of the most difficult economic conditions for more than a decade and with his own reputation as Chancellor on the line.

Hemmed in by the global credit crunch and the high levels of Government debt, Mr Darling is expected to make the best of a difficult hand emphasising his 'green' measures, including a 'showroom tax' on gas-guzzling 4x4s and the replacement of air passenger duty with a tax on flights.

But even here, he is under pressure from the motoring lobby to abandon a planned 2p rise in fuel duty due to come into effect on April 1 as prices at the petrol pumps continue to soar.

Environmental campaigners are urging Mr Darling to stick to his guns and go ahead with the increase as planned.

"Abandoning plans to increase fuel duty will seriously undermine the Government's green credentials," said Friends of the Earth economics campaigner Simon Bullock.

"Road transport is responsible for nearly a quarter of UK carbon dioxide emissions. The real cost of motoring has fallen under Labour, and traffic levels have risen by more than 10%."

However opponents of the increase, sensing a possible eleventh hour climbdown, called on the Chancellor to at least defer any increase to the autumn.

AA president Edmund King said it was becoming the "2p or not 2p" Budget.

"Fuel price instability is damaging to people and the economy and while this is largely influenced by the market, we believe the Government can do more to help people and business weather the financial damage and uncertainty high prices cause," he said.

The extent of the global economic worries was underlined with a co-ordinated move by leading central banks to pump billions into the money markets, with £10 billion from the Bank of England and 200 billion dollars (£100 billion) from the US Federal Reserve.