George Osborne defended his warning that sterling could be about to collapse, saying that it was his job to tell the truth about the consequences of ballooning debt.

The Shadow Chancellor told The Times on Saturday that increased public borrowing was already making the currency “less attractive” and that there was a risk of a run on the pound.

His comments were criticised by business leaders as well as by Alistair Darling and Gordon Brown. However, Mr Osborne dismissed suggestions yesterday that he had “talked down the pound”.

“My job as Shadow Chancellor is to tell the British people the truth about the British economy. The truth that it is the worst-prepared economy in the world for recession,” he told The Andrew Marr Show on BBC One. “The truth [is] that we have got the highest personal debt in the world. The truth [is] that the pound has fallen by a record amount against other currencies. I am telling the public the truth,and that is the job of elected politicians, particularly opposition politicians, in difficult times.”

He said that there was a “striking lack of confidence” in sterling on currency markets and that higher debt was a “bombshell” beneath any future recovery.

Some MPs suggested that a plunge in the pound when currency markets open today could leave Mr Osborne in serious difficulties - especially as David Cameron has so far failed to voice support for his close ally. Senior aides said, though, that Mr Cameron will endorse his Shadow Chancellor's comments on sterling when he launches a new attack on the Government's economic policies early this week.

Mr Darling sought to turn up the pressure on his shadow, questioning his judgment and insisting that it was “utterly pointless to offer a running commentary” on the pound. “All I would say is this, that a few weeks ago the Tories offered a bipartisan approach; now that has clearly gone to the wind,” the Chancellor said.

“This is when we at home and when we with other countries across the world should be working together. That is what people expect, and that is what I intend to stick to.”

Mr Osborne's comments also drew an angry response from Mr Brown, who said that politicians should not speak “irresponsibly” at a time of crisis. The Prime Minister said that he “regretted the partisan talk from the Opposition”, adding: “I believe that at a time when nations are coming together to deal with these problems, people are looking to politicians to be responsible and to show leadership.”

In response, a host of Tory MPs rallied around the Shadow Chancellor yesterday. Kenneth Clarke, a former Chancellor, said that Mr Osborne's remarks had been sensible, adding that there was no bar on discussing the pound's movements. Mr Osborne's frontbench colleague, Alan Duncan, said that he was “absolutely right” to raise the danger of a run on sterling. “I'd rather have George Osborne telling the truth than Gordon Brown charging around the world on a journey of deceit,” he added.

Michael Fallon, a senior member of the Treasury Select Committee, added: “It is the Shadow Chancellor's job to warn, and there is a very serious issue with sterling now.”

According to The Sunday Telegraph, the Conservative policy overseer, Oliver Letwin, has been given the job of drawing up a package of potential spending cuts. Mr Osborne denied that Mr Letwin's detailed involvement in forming economic policy was undermining his position. “Oliver Letwin has not been brought back - he was always head of policy,” he said.

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