In his first major speech as Prime Minister, he will stress the need to cut the £156 billion deficit and get millions of people back into work.

He will also set out the coalition's plans to support private enterprise and reduce reliance on the public sector.

Speaking in West Yorkshire, Mr Cameron will say that transforming the economy is the "first priority" of the Government.

"Britain is at a turning point today," he will say. "The decisions we make now will live with us for decades to come. For many years we have been heading in the wrong direction.

"Our economy has become more and more unbalanced, with our fortunes hitched to a few industries in one corner of the country, while we let other sectors like manufacturing slide...

"And, of course, as a country we have become indebted on an unprecedented scale. Our huge public debt is the clearest manifestation of our economic mistakes - the glaring warning sign overhead telling us we have taken the wrong route. We have been sleepwalking our way to an economy that is unsustainable, unstable, unfair and, frankly, uninspiring."

The Government has already set out £6.2 billion of spending cuts. More details of dramatic reductions in departmental expenditure are expected in the June 22 Budget.

So too are plans to increase capital gains tax, currently the subject of mounting backbench Tory disquiet. There are fears that Chancellor George Osborne could raise the current 18% levy on certain windfalls such as shares and second home sales to the same level as income tax - up to 40% and 50%.