Kwarteng said the planned top rate tax cut had become a “distraction” from the Government’s growth package unveiled ten days ago.

Since then the markets have been in meltdown and opposition to tax cuts for highers earners has grown.

Kwarteng said: “From supporting British business to lowering the tax burden for the lowest paid, our Growth Plan sets out a new approach to build a more prosperous economy.

“However it is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country.

“As a result I’m announcing we are not proceeding with the abolition of the 45p tax rate. We get it, and we have listened.

“This will allow us to focus on delivering the major parts of our growth package.”

That package includes accelerating the delivery of over 100 major infrastructure projects across the country, 38 new Investment Zones, the scrapping of some planning restrictions and dumping next year’s scheduled increase in corporation tax.