Army and police will receive emergency £150m

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An emergency £150m handout to help meet the costs of the "war on terrorism" was agreed by the Treasury in response to protests from the armed forces and police that their budgets had come under severe strain since 11 September.

MPs were told that the Ministry of Defence would receive an extra £100m for "new equipment and immediate operational requirements".

The money, set aside after a meeting with Geoff Hoon, the Secretary of State for Defence, is likely to be spent on vehicles, weapons and clothes for operations in Afghanistan.

The Ministry of Defence has told the Treasury that the unexpected operations have swallowed much of its contingency fund. The department is expected to ask for another £500m a year to build up its budget as part of next summer's Comprehensive Spending Review, which will cover the financial years 2003-04 to 2006-07.

A further £20m has been allocated by the Chancellor to "cut off the supply of finance to terrorists and fund other anti-terrorism measures". Much will be spent by secret services on surveillance equipment to aid efforts to locate Osama Bin Laden and leading members of his al-Qa'ida network.

The police will receive £30m over the next four months towards the extra cost of their policing duties, after the heightened security alert since the attacks in the United States. The Metropolitan Police will receive £22m and the City of London Police another £1m. The balance will be shared between other forces.

David Blunkett, the Home Secretary, said: "The cash will help the police maintain the level of service which the community rightly expects in terms of tackling crime and disorder and providing reassurance."

The Chancellor also announced that Britain had spent £100m on tackling the humanitarian crisis in Afghanistan and its surrounding countries since the crisis began. About two-thirds of the money has been drawn out of the Department for International Development's contingency fund. The rest has been provided by the Treasury.

Mr Brown said Britain had committed itself to a long-term goal of spending 0.7 per cent of its gross domestic product on international aid. The proportion now is 0.3 per cent. Clare Short, the Secretary of State for International Development, has been lobbying the Treasury for a sharp increase.

Mr Brown also called for a "new deal for prosperity" between rich and poor countries and said the United Kingdom would be proposing to the UN a new $50bn (£35bn) international fund to act as a "marshal plan for the Third World".