Cabinet ministers defended Chancellor Alistair Darling today after the Liberal Democrats said he should be sacked for being "caught with his hands in the till".
Lib Dem leader Nick Clegg backed a call by his economics spokesman Vince Cable for Mr Darling to be thrown out of 11 Downing Street over expense claims for accountant's fees and switching his second home.
But Mr Darling's office insisted he had done nothing wrong and the pair were accused of descending to "cheap jibes" by Trade Secretary Lord Mandelson.
Mr Cable used his column in the Mail on Sunday to demand the Chancellor's scalp, writing: "Here is the company finance director caught with his fingers in the till.
"He doesn't explain. He doesn't apologise. He just blames his colleagues for not stopping him. His moral authority has vanished. He must go, now. We need a Chancellor focusing on the national accounts rather than his own. There are some urgent economic questions to address."
Joining the demands, Mr Clegg told BBC Radio 4's Broadcasting House: "As Chancellor, Alistair Darling occupies a very special position in Government. He needs to enjoy the public's trust when it comes to issues of financial probity, of money, of managing our nation's finances.
"And given that very unique responsibility that he has, it's simply impossible for him to continue in that role when such very major question marks are being raised about his financial affairs."
Mr Darling was among ministers who paid accountants thousands of pounds of public money to complete their personal tax returns, his own bills coming to £1,400 over two years.
It was also reported by The Daily Telegraph that he "flipped" the location of his second home four times in four years, allowing him to claim thousands of pounds towards the cost of his Edinburgh home and a London flat.
His spokeswoman rejected all claims of wrongdoing by Mr Cable.
"The allegations made by Mr Cable are untrue," she said. "As Mr Darling consistently explained he paid for personal tax advice himself. The accountant's fees claimed were for preparing his office accounts to ensure the correct amount of tax was paid. That's an allowable claim. The accountant's fees were fully declared for tax purposes and he paid tax on the benefit."
She went on: "The allegation that he changed addresses for personal gain is untrue.
"He changed the designation of his second home when his circumstances changed in accordance with the rules. He also pays tax on the benefit of living in Downing Street and pays the council tax there."
Lord Mandelson later hit out at the two senior Liberal Democrats.
"That's pure politicking by Nick Clegg and by Vince Cable, and frankly it's beneath both of them to start hurling around cheap jibes like that," he told BBC Radio 4's T
he World This Weekend.
And Climate Change Secretary Ed Balls told Sky News: "I think Alistair Darling was doing absolutely right, I think he complied with all the tax rules."
The row came amid continued speculation that Mr Darling could lose his job in an anticipated cabinet reshuffle by Gordon Brown after what is expected to be a devastating night of European and local polls on Thursday.
Some reports this weekend suggested the popular Mr Cable could be drafted in in a bid to limit the damage to Labour and restore trust in politics - a possibility he firmly dismissed.
Another report suggested Schools Secretary Ed Balls, once Mr Brown's right-hand man at the Treasury, would be promoted in place of Mr Darling.
Asked which of the two he would prefer, Lord Mandelson said: "One thing I would say is that I've worked very well with Alistair Darling, the incumbent Chancellor, and if it is the Prime Minister's choice that I should continue to do so, I'll be very happy to do that."
Mr Cable: "I would not agree to be co-opted into a Labour Government in its dying days. There is not a scintilla of truth in the idea that I might become Chancellor.
"I am part of Nick Clegg's team and that is where I intend to remain. This kind of arrangement might have been possible in the early days of Tony Blair's government, but not now. What we need now is an election."
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