CHANCELLOR George Osborne might tweak his plans to cut tax credits as pressure mounts from within Tory ranks ahead of today’s debate in the House of Lords.

Education Secretary Nicky Morgan let slip that Mr Osborne is “in listening mode” hours after Labour’s shadow chancellor John McDonnell urged him to reverse the policy.

In an open letter to the Chancellor, Mr McDonnell promised to “put politics aside and support him if he chooses to reverse the changes to tax credits fairly and in full.”

Speaking on BBC One’s Andrew Marr show this Sunday, Ms Morgan said: “The Chancellor’s track record has very much been about supporting, in budgets, working families.

“He very much is always in listening mode.”

Pressure has been mounting on the cabinet from within the Conservative Party to soften the blow the £4.4 billion cut would inflict on Britain’s poorest families.

The policy has also sparked the possibility of a constitutional crisis, with Liberal Democrat lords scheduling a so-called fatal motion for the last reading on the document today, thereby scuppering the legislation and breaking the longstanding constitutional rule that the upper house does not decide financial matters.

Prime Minister David Cameron went as far as to threaten a suspension of the higher chamber, where the Tories are outnumbered by the opposition, if the Lords voted down the welfare squeeze.

In his letter, Mr McDonnell said: “Now, you, me and everyone else in Westminster knows that you will have to U-turn on this issue.”

The Hayes & Harlington MP added: “However, you need to do it in full. It can’t be a fudge. Not some partial reversal that scores cheap headlines yet leaves people still worse off or lands another burden on middle- and low-earners or the poorest in our society.

“You need to drop this policy completely.”

The Adam Smith Institute advised the government today to replace tax credits with a negative income tax.

The payment would replace all main benefits including jobseeker’s allowance and universal credit and would be gradually withdrawn as individual salaries increase.