Unveiling his comprehensive spending review yesterday, the chancellor promised to make major savings in the running costs of government.

Gordon Brown told MPs that implementation of the Gershon review would save £21.5 billion by 2008 but cost over 100,000 public service jobs.

In return - and through lower debt and unemployment payments - Brown increased the amount of money he will put into the public sector in the three years from 2005.

The biggest winners were the Home Office, housing, transport and international development, all of which are voter friendly areas ahead of a likely general election next year.

However the Ministry of Defence will have to make do with a small above inflation rise, while the Department for Work and Pensions will get a real terms cut.

The Conservatives claimed the government had grown "fat" while the Liberal Democrats accused Brown of failing to take truly tough choices on priorities.

The FT claims the chancellor surprised Cabinet colleagues by announcing that he also wants to raise a further £30 billion through public asset sales, which some see as a safety net in case growth and tax revenues do not meet his predictions.

The Times reports that Labour MPs "looked uncomfortable" as Brown announced the job cuts and paid tribute to the work of public servants.

Meanwhile the Independent says that behind the scenes, relations between Brown and the prime minister have hit an all time low.