The government will reverse almost all the tax cuts it announced last month, Chancellor Jeremy Hunt has said.
But Mr Hunt said the cuts to stamp duty paid on house purchases and the scrapping of the National Insurance rise would continue.
He also announced that beyond April support for household and business energy bills would be reviewed.
Mr Hunt said economic growth required “confidence and stability”, adding that the UK “will always pay its way”.
Among the measures to be reversed are plans to cut the basic rate of income tax from 20p to 19p from April.
Mr Hunt said the rate would remain at 20p “indefinitely until economic circumstances allow for it to be cut”.
The BBC’s political editor Chris Mason said the statement shredded nearly every element of Liz Truss’s prospectus, and showed “the Truss programme for government is dead”.
One former cabinet minister told the BBC: “She is a goner. [The chancellor’s statement] put it beyond any doubt.
“What is the point of Liz Truss? That is the question… there is literally no point,” they added.
A Downing Street spokesman said the PM and chancellor were working closely together, and sidestepped questions on whether Ms Truss would be resigning.
Pressed on what is left for Ms Truss to deliver on, the official said she and Mr Hunt “agree that it’s vitally important” that she delivers on her mission of “going for growth”, including investment zones and boosting the UK’s energy supply.
The chancellor said it was “a deeply held Conservative value” that people should keep more of the money they earn.
“But at a time when markets are rightly demanding commitments to sustainable public finances, it is not right to borrow to fund this tax cut,” he added.
Other measures to be axed include:
- Cuts to dividend tax rates
- The reversal of off-payroll working reforms introduced in 2018 and 2021
- VAT-free shopping for international tourists
- The freeze on alcohol duty rates
Mr Hunt said measures, including the previously announced freeze on corporation tax and keeping the top rate of income tax, would raise around £32bn a year.
Last month, the government announced it would cap the typical household energy bill at £2,500 for two years.
However, Mr Hunt said this pledge would now only last until April, adding that beyond then “it would not be responsible to continue exposing public finances to unlimited volatility in international gas prices”.
He announced a review to design a new approach “that will cost the taxpayer significantly less than planned”.
The prime minister has repeatedly highlighted how the government’s energy support package lasted longer than the six months promised by Labour.
Mr Hunt said there would be “more difficult decisions” on tax and spending.
“All departments will need to redouble their efforts to find savings and some areas of spending will need to be cut,” he said.
Last week, Ms Truss said she was “absolutely” not planning public spending cuts.
Meanwhile, Angela Richardson has become the fourth Conservative MP to publicly call for Ms Truss to stand down.
Ms Richardson, who backed Ms Truss’s rival Rishi Sunak during the leadership campaign, told Times Radio problems with the public finances were “100% down to the prime minister” and it was not “tenable” for her to stay on any longer.
She joins Tory MPs Crispin Blunt, Andrew Bridgen and Jamie Wallis in openly calling for the PM to go.
Many others are privately saying Ms Truss cannot remain prime minister.
Under current Conservative Party rules, Ms Truss is safe from a no confidence vote by Tory MPs to oust her for a year. The rules could be changed, however sources suggested to the BBC that the 1922 committee of backbench MPs, who set the rules, would prefer the prime minister to jump before she is pushed.
Some Tories have suggested putting forward just one candidate to replace her, with MPs choosing their next leader in a couple of days without consulting members, as would normally happen.
The three names being widely discussed are Defence Secretary Ben Wallace, Commons leader Penny Mordaunt and former Chancellor Mr Sunak.
However, there is little agreement over who should take over from Ms Truss if she is removed.
Tory MP Ben Bradley said the chancellor’s statement effectively rendered the political fallout of the government’s mini-budget and the slump in polls for the Conservatives “entirely pointless”.
“Right back where we started, just far less popular than before,” he added.
Labour said the Conservatives had “lost all credibility”.
“The chancellor said that growth requires ‘confidence and stability’ yet it’s clear that the Tories can’t provide this,” shadow chancellor Rachel Reeves said.
The Liberal Democrats’ Treasury spokeswoman Sarah Olney called for a general election to ensure “stability”.
SNP Treasury spokeswoman Alison Thewlis said the now virtually scrapped mini-budget had caused “huge economic pain”, adding that she was worried about suggestions of a further “tightening to purse strings”.
The financial markets appeared to respond positively to the chancellor’s announcement.
Government borrowing costs fell and the pound rose against the dollar, before falling back slightly.