A quarter of all Whitehall jobs are to be axed over the next three years under a civil service plan to save £1 billion.

The prime minister has instructed mandarins from the three biggest spending departments to present plans on Friday for 3,300 job losses, including hundreds of compulsory redundancies, to free cash for frontline spending.

Tony Blair has ordered the health and education departments and the Home Office to fast-track their plans to cut at least 25 per cent of their central staff.