Gordon Brown has set out plans for a radical reform of Whitehall's working practices.

The chancellor told MPs on Monday that over 100,000 jobs are to be axed, with an additional 20,000 posts being moved from London to the regions.

Brown said there had been a "rigorous" review of back office services and working practices.

And to relative silence from the Labour benches, he argued that new IT systems were allowing radical changes to the way public services are run and staffed.

"It is precisely because the public sector has invested £6 billions in new technology, modernising our ability to provide back office and transactional services, that I can announce...a gross reduction in civil service posts of 84,150," he announced.

There will also be a further 20,000 reduction in staff employed in in local government, Scotland, Wales and Northern Ireland.

It was revealed that the number of posts lost as a result of the merger of Inland Revenue and HM Customs would rise from an initially estimated 14,000 to 16,000.

The chancellor said the government would "work with the workforce and the unions" to help those who are sacked.

Regions gain

It was also announced that 20,030 civil service jobs are to be moved to the regions.

Leading by example, the chancellor announced that the Treasury will move 5,000 of its own staff away from the Capital.

Other departments affected by the change include the Department for Work and Pensions, the Department for Environment, Food and Rural Affairs, and the Department for International Development.

Also set for a shake-up is the system of public sector productivity, with Brown highlighting a new clampdown on sickness rates among staff.

He said that current sickness arrangements are "open to abuse", and ministers would be publishing plans to curtail uncertified sickness absence.

Efficiency challenge

Sir Peter Gershon, who has been leading the government's efficiency drive, has identified £6 billion in procurement savings that can be made by 2008.

The chancellor said the efficiency measures would boost frontline spending by £21.5 billion a year by 2008 - more than the £20 billion a year originally identified by Gershon.

And he also announced a new objective of £30 billion of asset sales.

In a swipe at Conservative spending plans, Brown added that going beyond his proposed level of efficiency gains would "put the delivery of frontline services at risk".

'Bitter blow'

But Brown's plans drew a hostile response from trade unions - who have vowed to oppose the reduction in civil service numbers.

TUC general secretary Brendan Barber said the cuts would damage frontlines services.

"We are however very concerned at the sudden escalation and arbitrary manner of the civil service job cuts," he said.

"These cuts cannot be made without hitting the quality of public services.

"They will deal civil service morale a bitter blow just as staff support is needed for change."