David Cameron is facing further pressure from Tory backbenchers after it was confirmed that marriage tax breaks will not be included in next month's Budget.
It had been planned that one member of a married couple or civil partnership would be allowed to transfer £750 of their tax-free personal allowance to their partner, reducing their tax bill. This would be worth around £150 a year to basic-rate taxpayers.
There had been speculation that the Government was planning to introduce the tax break in an attempt to appease backbenchers angry over same-sex marriage legislation.
In 2010, the Conservative general election manifesto pledged to introduce the marriage tax break, and the commitment was also included in the coalition agreement with the Lib Dems.
But the government is yet to bring in the tax break, angering sections on the right of the party.
Amid fevered speculation over plots against the Prime Minister - currently in Liberia ahead of a UN meeting - there have been rumours that rebels have set a deadline of summer 2014 for the party's electoral fortunes to turn around.
A number of backbenchers have suggested the change should be included in Osborne's Budget next month in return for their supporting controversial plans to introduce gay marriage.
However, a senior Government source flatly rejected the idea of a "quid pro quo" deal, and ruled out a marriage tax break featuring in this Budget.
"It won't be in the Budget but it will be in this Parliament," the source told the Press Association. "This Budget obviously, with all that has happened in recent weeks and months, will be very much focused on growth in the economy."
The source also made clear that Osborne had the "full confidence" of the Prime Minister.
"He is an extremely successful Chancellor. He is battling very difficult economic circumstances," the source said.
"George Osborne will be Chancellor at the next general election."
According to the Times, the issue of gay marriage is causing Conservative members to leave the party in significant numbers.
The newspaper claimed that as many as 100 members had revoked their affiliation in some constituencies.
Tory MP David Burrowes is quoted as saying: "There's serious unrest in the grassroots. You cannot avoid the fact that the troops are unhappy. People are drifting away."
Earlier on HuffPost: