LIVE FROM THE COMMONS Video and key points in text from Gordon Brown's statement

Mr Brown has insisted there will be no pre-election spending spree.

With big rises already agreed for schools and hospitals, there has been speculation that other departments could face tough spending limits.

But insiders suggest he will double to 80,000 the number of civil service jobs he plans to axe and so free up extra cash for defence, housing and police.

The Conservatives say Mr Brown is only trying to grab headlines rather than propose far-reaching reform.

'Boost for military'

According to No 10, Mr Brown told the Cabinet on Monday the review would "make clear the government's ruthless focus on its priorities".

Tony Blair's official spokesman said the chancellor had stressed he would not loosen his discipline on public spending.

Savings made through falling debts, lower unemployment and the new efficiencies would release resources to invest in the economy and public services, said the spokesman.

The savings will be spent mostly on things voters notice like doctors and nurses Robert Chote, Institute for Fiscal Studies director What will the review deliver? A bumpy week for Blair

The Times newspaper says the review will give the Armed Forces a better deal than the settlement two years ago, which in turn was the best for the Forces for 20 years.

Monday's Guardian newspaper predicts extra money for housing and extra spending to combat terrorism.

But the Institute for Fiscal Studies (IFS) says the chancellor has "limited room for manoeuvre" and he may need to raise taxes by as much as �10bn.

Mr Brown has already signalled that spending will rise by about 2.7% a year above inflation in 2006-08.

But once he has paid for what he has promised on health and education he is left with an average real increase of about 1.4% a year, said IFS director Robert Chote.

Lower costs

Tory frontbencher Theresa May questioned whether Mr Brown could deliver the job cuts and said her party was offering genuine reform.

"He seems to be trying just to grab headlines in terms of the numbers of staff he can cut," she told Today.

The review kicks off a hectic week for Blair

"We are taking a rather more fundamental look at it and saying what we need to do is slim down this fat and bloated government."

Her warning was echoed by CBI director general Digby Jones, who said: "It is no use celebrating the courage of a job reduction programme in the civil service when just down the corridor there is someone busily recruiting."

Liberal Democrat Treasury spokesman Vince Cable accused Mr Brown of taking a "macho" approach to job cuts.

"That, frankly, is not the best way to approach your labour force," he said.

Mr Cable said some areas were facing cuts to finance others because public spending was having to be slowed.

Environment

Jonathan Baume, general secretary of the First Division Association of senior civil servants, suggested Mr Brown's approach could be inefficient.

"He's started with the cuts and gone on to find ways of achieving them," said Mr Baume, who warned that redundancies in Whitehall could make government less capable of undertaking new programmes.

Environmental groups say extra investment is needed to ensure government departments meet the goals on energy generation and waste recycling.

The RAC Foundation for Motoring urged the chancellor not to give in to environmental groups by cutting back on the roads programme.

Mr Brown delivers his fourth spending review following a weekend of speculation about Tony Blair's future, including suggestions the pair agreed a deal last November for the PM to hand over the leadership "around about now".

Mr Blair has dismissed the claims "as absolute rubbish", according to Andrew Marr.

The prime minister now faces a particularly challenging week. The Butler report into intelligence on Iraq is published on Wednesday and by-elections in Leicester South and Birmingham Hodge Hill are held a day later.