Chancellor Kwasi Kwarteng is said to have dropped plans to scrap the top rate of income tax with unrest growing within the party over the backlash to his mini-budget.

Unconfirmed reports say there has been a rethink at the Treasury and that the plan will be reversed. A statement is expected this morning.

Mr Kwarteng will address the Tory conference today and will insist that he will manage taxpayers’ money with an “iron-clad commitment to fiscal discipline”.

He will say the plunging pound is symptomatic of a decline by other currencies against a strong dollar and that other economies are facing rising inflation, interest rates and energy costs.

Mr Kwarteng will tell the party’s annual conference that his approach will get the economy on track for 2.5% growth.

However, his speech will determine the direction of the markets, though he is not due on stage in Birmingham until about 4pm and may not conclude before the London Stock Exchange closes at 4.30pm.

Former Tory Chancellor George Osborne said it was “touch and go whether the Chancellor can survive” the fallout, telling the Andrew Neil Show it would be “curtains” for Mr Kwarteng if his speech was badly received.

Mr Kwarteng will set out a “new economic deal ” for Britain and will argue that his plan is “sound, credible and will increase growth”.

He will tell delegates: “I refuse to accept that it is somehow Britain’s destiny to fall into middle income status or that the tax burden reaching a 70-year-high is somehow inevitable. It isn’t, and shouldn’t be.

“We needed a new approach, focused on raising economic growth.

“That is the only real way to deliver higher wages, more jobs, and crucially, revenue to fund our precious public services, and it is the only way to achieve long-term fiscal sustainability.

“We must stay the course. I am confident our plan is the right one.”

The Chancellor is expected to set out further details of his reforms, including the so-called “Big Bang 2.0” package of financial regulation, in the coming weeks. MPs will not get to vote on the package before his “medium-term fiscal plan” is delivered on 23 November, which will be accompanied by the Office for Budget Responsibility’s forecasts.

Prime Minister Liz Truss admitted yesterday that she failed to prepare the markets for the package of cuts. She also declined to rule out cuts in public spending to help balance the books, stating only that the government was seeking “value for money”. However, there is wide expectation that benefits will see a real-terms cut just as earners on more than £150,000 see their taxes slashed.

The decision to scrap the additional rate of tax for the highest earners has been criticised by the International Monetary Fund, opposition parties and former Tory Cabinet ministers after it resulted in a £65 billion emergency intervention by the Bank of England.

Former ministers Michael Gove and Grant Shapps said it was wrong to cut income tax for high earners at a time when millions of people are feeling the cost of living squeeze. Mr Gove hinted that he would vote against the Chancellor’s package.

There was further surprise when Ms Truss revealed that cutting the top tax rate was Mr Kwarteng’s decision and that other Cabinet members had not been told about it before it was announced in the 23 September Fiscal Event.

Scottish Tory MP Andrew Bowie, who was parliamentary private secretary to Theresa May when she was in No 10, agreed with Mr Gove that unfunded tax cuts were not Conservative.