He will give tax incentives to companies who opt for greener vehicle fleets. And in a further move to show his green credentials Mr Darling will announce that Britain’s first five-year carbon budget, setting out the way independent experts believe that the country should meet the target of reducing emissions by 60 per cent by 2050, will be published next year alongside the main Budget.

The move is designed to show that meeting climate change objectives is now at the heart of the Government’s economic policy.

Mr Darling will try to repair his damaged relations with the City with concessions over his plans to tax nondomiciles, including a deal with Washington that will mean thousands of American bankers and businesmen working in Britain can set their annual £30,000 charge against their US tax bills. He will also change the rules relating to nonresidents qualifying to pay tax, freeing thousands from the British tax net.

The Budget will also highlight measures to tackle child poverty as Mr Darling responds to growing Cabinet calls for him to do more to more to enable Labour to meet its target of halving child poverty by 2010. There will be changes to the tax credit system to help working families.

The Chancellor is set to announce a shake-up of car taxation with people buying the most polluting vehicles heavily penalised and those who go for green alternatives paying less tax. Buyers of “gas-guzzlers” in car tax Band G will be confronted with a first-year charge of more than £1,000 in vehicle excise tax, before it reverts to the current level of £400. Mr Darling will also increase the number of bands from the current seven. Drivers in the lower bands will pay less tax than at present. The higher the emissions, the higher the first year excise duty charge will be.

One of his most controversial moves will be to go ahead with the 2p-a-litre rise in the price of petrol that was announced last year. Motoring organisations have been calling on him to defer it because of the present high prices. But to do so would leave him short of much needed revenue and go against the grain of his emphasis on environmental measures.

As The Times disclosed on Saturday implementation of many of the tax increases, including those on cars, will be delayed for a year. But he will raise duties on alcohol, ending the ten-year freeze on spirits duty.

Mr Darling needs to show the markets that, over time, he will act to bring down borrowing, but he does not want to tighten the economy at a time when it is expected to slow down. He will revise his growth forecast down by a quarter of a percentage point to 1.75 per cent on Wednesday.

Mr Darling’s moves on nondoms will be welcomed in the City, even though he is refusing to back down over introducing the new charge. He will say that he is confident that an agreement with the US will ensure that the £30,000 charge on Americans working in Britain does not amount to double taxation.

American citizens are taxed on their worldwide income. The changes to rules for nonresidents will also be welcomed by those who commute to London. Originally the plan was for days spent travelling to and from Britain to count towards the limit of 183 days a year to qualify as non resident. Now it will be based on overnight stays.

George Osborne, the Shadow Chancellor, called for corporation tax to be curbed to help to revive the economy. He said that the main rate should be cut from 28p to 25p and a planned increase in the small companies rate from 20p to 22p abandoned. Mr Osborne said that Britain currently had “one of the most uncompetitive corporate tax rates in the world”.

“At the moment . . . there is no scope for a massive cut in the business taxes because of the budget deficit,” he told The Andrew Marr Show on BBC One. “So I am suggesting a simplification of the system, getting rid of the very expensive reliefs and allowances that exist, and using the proceeds to cut the headline rate.

The Institute for Public Policy Research, the left-leaning think-tank, said that this Budget was the Government’s “last chance” to take the steps needed to meet its goal on child poverty. It urged Mr Darling to increase working tax credit for couples to £91.31 a week, introduce a personal tax credit allowance so that each adult in eligible families would be able to earn £100 a week before losing credits and raise the child element of child tax credit by £8 a week.