By Jon Craig, Chief Political Correspondent
Ed Miliband is to unveil a new policy to balance Britain's books in an attempt to repair the damage to his credibility when he failed to mention the deficit in his party conference speech.
In a speech on tackling the deficit, he will pledge that a Labour government would cut spending year on year in all Whitehall departments apart from health and international development until the deficit has been dealt with.
The move, coming just a week after George Osborne's Autumn Statement, is intended as a fightback after Mr Miliband's conference blunder and opinion polls showing Labour trailing the Conservatives on the economy.
A poll by ComRes last week suggested 43% of people think they would be better off under David Cameron and Mr Osborne, while only 32% believe they would do better under Mr Miliband and Ed Balls.
Mr Miliband will accuse the Conservatives of planning to return spending on public services to a share last seen in the 1930s, a time before there was a National Health Service and when young people left school at 14.
"And they have finally been exposed by the Autumn Statement for what they really are: not modern compassionate Conservatives at all - but extreme and ideological, committed to a dramatic shrinking of the state and public services, no matter what the consequences," he will say.
Unveiling Labour's alternative, Mr Miliband will say Britain must deal with the deficit to create the strong economic foundation needed to build prosperity for working people, attract investment and fund public services.
"There is no path to growth and prosperity for working people which does not tackle the deficit.
"What we need is a balanced approach which deals with the deficit - but does so sensibly," he will say.
Mr Miliband will add: "This is an essential test of credibility.
"There is huge uncertainty about the deficit because of economic circumstances and on the basis of recent experience.
"That makes it all the more important that parties do not spray around unfunded commitments they cannot keep.
In a letter to shadow cabinet colleagues, shadow chancellor Ed Balls says: "We will set out for our manifesto other priority areas of spending which will be protected.
"In the meantime you should be planning on the basis that your departmental budgets will be cut not only in 2015/16, but each year until we have achieved our promise to balance the books."
In response the Tories hit back, with Business Minister Matthew Hancock claiming: "Labour's policy is to run deficits forever - more borrowing that would add to the national debt every single year.
"That would mean more debt than hardworking taxpayers or our children could ever hope to repay.
"This risk to the economic recovery is exactly why Ed Miliband simply isn't up to the job."
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