Vince Cable has privately indicated he could walk out of the coalition and “bring the Government down” if he is “pushed too far” in negotiations with Tory ministers, it was disclosed last night.

The Liberal Democrat Business Secretary was recorded telling undercover reporters from The Daily Telegraph that the situation with the coalition was “like fighting a war” and that he could use the “nuclear option”.

He also told the reporters — posing as constituents in his Twickenham constituency — that he believed David Cameron wanted to reduce or scrap altogether the winter fuel allowance for pensioners.

Mr Cable — the most senior Lib Dem member of the coalition after Deputy Prime Minister Nick Clegg — said last night in a statement he was “embarrassed” by his remarks but insisted that he had no intention of resigning.

However, his frank comments will raise fresh questions over whether the Tory-Lib Dem coalition can survive intact until the planned date of the next General Election in May 2015.

During his conversation with the undercover reporters Mr Cable said he had been involved in “big argument” over how to deal with the banks, with the Lib Dems pressing for a “very tough

approach” which was opposed by “our Conservative friends”.

He said that while he had to pick his fights carefully, he was prepared to use the ultimate sanction.

“I have a nuclear option; it's like fighting a war. They know I have nuclear weapons, but I don't have any conventional weapons. If they push me too far then I can walk out and bring the Government down and they know that,” he said. “So it is a question of how you use that intelligently without getting involved in a war that destroys all of us.”

Meanwhile, union leaders warned the Prime Minister yesterday that millions of families face a “bleak” future because of the Government's spending cuts, which are expected to hit jobs and services in the new year.

David Cameron was given “strong views” that the cuts will be “socially divisive and economically dangerous” during a meeting in 10 Downing Street, the first official one between a Tory Prime Minister and the leaders of the union movement in 25 years.

TUC general secretary Brendan Barber said afterwards: “We warned the Prime Minister that next year promises to be even bleaker for millions of families and their communities as the spending cuts bite hard and hit jobs and services.

“We urged him to do more to raise money from the banks.”