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And every pensioner will get a one-off payment of £60, on top of the £10 Christmas bonus, also from January.

With new car sales plunging Mr Darling watered down plans for higher road tax bands for gas guzzlers.

In 2009, duty rates for all cars will only increase by a maximum of £5 as usual. From 2010, the most polluting cars will pay a maximum of £30 instead of up to £90 as originally planned.

There will be a new 45% tax rate for the top 1% of earners - over £150,000 - from April 2010. From April 2010, those with incomes between £100,000 and £140,000 will see the value of their personal allowance reduced to get the same benefit as a basic rate taxpayer.

For people with incomes above £140,000, the full value of the personal allowance is to be withdrawn.

There was help for home-owners facing the dole.The scheme which covers mortgage interest payments for those who have lost their jobs was doubled to cover mortgages of up to £200,000.

Shadow Chancellor George Osborne was scathing of the Chancellor's package.

He said it would lead to a £1 trillion national debt and leave a "huge unexploded tax bomb" ticking under the public purse. "That is the bill for Labour's decade of irresponsibility," he told MPs.

He said Mr Darling was giving away £20 billion but taking back £40 billion through tax hikes, including the NI rise - which Mr Osborne described as a "tax on jobs".