Following worldwide criticism to his proposal of levying a tax on all financial transactions, Gordon Brown has been forced into yet another humiliating U-turn.

The US led a backlash against the “Tobin tax” on financial transactions after Mr Brown took a Group of 20 finance ministers’ meeting by surprise with his proposal at the gathering in St Andrews, Scotland.

in private briefings Treasury and Downing Street officials had suggested that taxing financial transactions was the prime minister’s preferred mechanism aimed at curtailing international banks.

The Financial Times is now reporting officials are switching emphasis after a chorus of opposition from the US, Canada, Russia, the International Monetary Fund and the European Central Bank.

Tim Geithner, US Treasury secretary, said: “A day-by-day financial transactions tax is not something we are prepared to support.”

Dominique Strauss-Kahn, IMF head, repeated his long-held position that a Tobin tax is “a very old idea that is not really possible today”.

Signalling the change in emphasis officials said:

“We’re not that massively wedded to a transactions tax. We’re not saying ‘it’s this or nothing’ – we’re saying we need a deal,” an aide told the FT.

The aide added: “We knew going into the G20 finance ministers’ meeting that these were pretty radical steps that would put some noses out of joint,” one insider said. “The prime minister has taken a calculated risk and we’re very much up for the fight on this.”

Responding to the PMs proposal Mark Hoban, the shadow financial secretary, said: “This is embarrassing, Gordon Brown has demonstrated that he will put nothing before a cheap headline including Britain’s credibility before the world.”

Conservative treasury minister Mark Hoban has said that a Conservative government will abolish the Financial Services Authority within a year of the party winning the next General Election, paving the way for a beefed-up Bank of England to regulate the financial sector.

The beefed-up central bank would monitor the health of the financial system, setting capital requirements and leverage limits, and police individual lenders. A Financial Policy Committee would be established with the same stature as the bank’s existing interest rate-setting Monetary Policy Committee.

Speaking to a conference, Hoban said:

“We need to be very careful about the timing of this,I can say we would expect to make progress on this in the first year of a Conservative government and not let it linger too long. We want to see a much more intrusive regime by the Bank of England.”