Alistair Darling’s future was in question last night after Whitehall insiders said that he could be involved in an imminent Cabinet reshuffle.

The Chancellor’s assertions at the weekend that government changes were unlikely were described in categorical terms as “wrong”. Whitehall insiders told The Times that a controversial interview, in which he claimed that Britain could be heading into the worst economic conditions for 60 years, may have harmed his position.

Tensions between the Treasury and Downing Street were threatening to undermine Gordon Brown’s relaunch, which will begin tomorrow with a package of help for first-time buyers.

Ministers privately criticised Mr Darling for his interview, in which he said that the public were “p***** off” with Labour and even suggested that other ministers were keen on his job.

At Mr Brown’s insistence, the Chancellor launched a damage-limitation exercise, insisting that he had been talking about world conditions and that Britain was better placed than before to withstand problems.

However, a document leaked last night showed that ministers are braced for a surge in crime. In the draft report to the Prime Minister, Jacqui Smith gives warning that violent crime could rise by 19 per cent in the event of a full-blown recession, while theft and burglaries could rise by 7 per cent this year. The Home Secretary adds that a growing sense of disadvantage could push many susceptible people into extremist groups “that can lead to people becoming terrorists”.

Mr Brown and Mr Darling will announce an expansion of share-equity schemes for first-time buyers tomorrow. A scheme to help with energy bills could come later in the week. On Thursday the Prime Minister will set out his analysis of the challenges facing Britain and promise immediate measures to help ordinary families.

George Osborne, the Shadow Chancellor, said that Mr Darling’s “outburst of truth” had torpedoed the Prime Minister’s recovery plan. “We now know that this won’t be an economic recovery plan,” he said. “It will be Gordon Brown’s short-term political survival plan for which the country may have to pay an unfair price with billions of extra borrowing.”

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