Deeper welfare cuts are "a price that works" to restore the UK economy and create more jobs, George Osborne insisted in the latest salvo of a public spat between the coalition government parties over spending plans.
The Chancellor hit back after his Liberal Democrat deputy at the Treasury Danny Alexander claimed the Tories would "inflict unnecessary pain" on the country by shrinking the state.
Speaking to BBC News, Mr Osborne said:
We are going to have to make savings... we are going to have to cut certain welfare bills like benefits that go to working-age people. But the prize is economic stability, growth, jobs in the future, brighter future, I think that's a price that works for our country.
Danny Alexander has accused the Conservative Party of "pandering to Ukip" in a pre-election "panic" as the coalition colleagues continue to trade blows.
The Chief Secretary to the Treasury claimed the Tories would "inflict unnecessary pain" on the country because they were "ideologically committed" to shrinking the state and had a policy of "austerity forever".
In an article for The Daily Telegraph, he wrote: "It is sad to see the Conservatives move away from the sensible, balanced approach of the coalition, to a more doctrinaire policy that would inflict unnecessary pain on the people of Britain."
David Cameron has accused the Liberal Democrats of being "all over the place" in their economic plan, in the latest coalition division following George Osborne's Autumn Statement last week.
The Chancellor said yesterday that his Liberal Democrat colleagues would cause "economic chaos" if they came to power and today the Prime Minister emailed his party hailing a "distinctively Conservative Autumn Statement."
"The Liberal Democrats are all over the place, unable to decide whether they want to stick to the plan or veer off it," Mr Cameron wrote. "And they - like Ukip - would be prepared to prop up a failing Labour Government.
"In contrast, the Conservatives offer a long-term economic plan that is working."
Nick Clegg has accused the Conservatives of "kidding themselves" on the economy.
The Deputy Prime Minister told the BBC's Andrew Marr Show that he disagreed with his coalition partner's outlook on the economy, saying their plans were "impossible."
"I just think the Conservatives are kidding themselves and seeking to kid British voters if they are claiming that it is possible to balance the books, deliver unfunded tax cuts, shrink the state and support public services," Clegg said.
"It just doesn't add up," he said following George Osborne's scathing attack on the Lib Dems.
George Osborne has launched an scathing attack on his Lib Dem colleagues, warning they would cause "economic chaos" in a future government.Read the full story ›
David Cameron agrees with George Osborne that some of the coverage of the Autumn Statement was over the top and "hyperbolic".
Mr Osborne this morning complained about a BBC report that said spending cuts would return the UK to the days of The Road to Wigan Pier, George Orwell's seminal 1930s account of working class hardship in northern England.
The Prime Minister's spokesman said Mr Cameron agreed that the comparison was not helpful, saying:
I don't think that they help us have what is important here, which is a clear and sensible and measured debate about the decisions that both are being taken and need to be taken in the future. So, the Prime Minister very much shares the Chancellor's view.
Just as it is important to say, as the Chancellor did, that those types of references are hyperbolic descriptions and I'm not sure help the type of debate we need, it's also right to say that what the Prime Minister, Chancellor and others are focused on is their plan and explaining why their approach is the right one.
Shadow Chancellor Ed Balls has insisted Labour will cut spending to help get rid of the budget deficit, but will do so in a fairer way than the Conservatives.
He told ITV News:
The next Labour government will cut spending to get the deficit down, will get the budget balanced and into surplus as soon as possible in the next Parliament and the national debt falling but we'll make different choices from George Osborne to do things in a fairer way. We will reverse the top rate tax cut and we will have to take the Winter [Fuel] Allowance away from the richest pensioners.
The scale of the Conservatives' planned spending cuts after 2015 would mean the role of the state would change "beyond recognition", the head of the Institute for Fiscal Studies has said.
The IFS said £35 billion of the cuts in spending by Whitehall departments have already happened, with £55 billion yet to come.
If reductions in departmental spending were to continue at the same pace after the May 2015 election as they have over the past four years, welfare cuts or tax rises worth about £21 billion a year would be needed by 2019/20 - at a time when Conservatives are committed to income tax cuts worth £7 billion - said IFS director Paul Johnson.
Mr Johnson said voters would be justified in asking whether George Osborne was planning "a fundamental reimagining of the role of the state".
An online calculator to work out how the new Stamp Duty system will affect homebuyers has been used 500,000 times in the last 24 hours, Treasury Minister David Gauke has announced.
The HMRC Stamp Duty Land Tax calculator has had half a million hits in last 24 hours. Find it at http://t.co/TPcQnllxDw