DAVID Cameron has urged Labour rebels to vote with his party to stop the 10p income tax rate being scrapped.

The Conservative leader - speaking exclusively to the Manchester Evening News last night - said there was a mood of "depression" on the Labour back-benches over the issue.

And he said he wanted to "work together" with rebels to see Gordon Brown defeated in a crunch vote next week.

"This is a very serious moment for this government," said Mr Cameron. "It will hit 5.3 million of the lowest-paid people in the country.

"It is hitting them with a tax rise at a time when grocery bills are going up and mortgages will be going up. They are finding it difficult to make ends meet anyway.

"This is a really serious problem and we are asking [the government] to stop and think again.

"We have put forward an amendment and we want to find some way of stopping this.

"The mood is very depressed on the Labour side because they think, `Did we go into politics to hit the working poor with big tax bills?'

"I hope we can work together with Labour rebels to stop this."

Mr Cameron was speaking to the MEN as Mr Brown met with his MPs to outline ways his government could help those hit by the scrapping of the 10p rate.

The prime minister addressed a meeting of the Parliamentary Labour Party after it emerged more than 70 rebels had signed a motion expressing "concern" about the move.

The House of Commons Treasury Committee has claimed single people with no children earning under £18,500 will lose up to £232 a year.

Mr Brown was coming under fire on a second front last night over the Bank of England's £50bn plan to allow banks to swap risky mortgage debts for government bonds.

Credit crisis

Chancellor Alistair Darling said the move was necessary to prevent the credit crisis causing further damage to Britain's banking system.

One of the country's biggest mortgage lenders, Abbey, cut rates on some of their deals last night in response.

Mr Cameron said his party backed the Bank of England's decision. He denied the move was a "bail-out" and said his party had held long talks with Bank officials before offering their support.

But he said it was clear there had been government "failings" that had caused the move to become necessary.

"This is not a bail-out," he said. "It is a Bank of England package. This is the right thing to do because it is in everybody's interests to get the money markets moving again.

"It is clear, though, that there have been failings in terms of allowing the credit boom to run out of control."

Mervyn King, the Bank of England governor, said lenders taking advantage of the scheme - which will be worth an initial £50bn over three years - would have to provide assets of "significantly greater" value than the Treasury bills they receive to avoid the taxpayer taking on the risk of potential losses.

"[This is] not part of this scheme to take us back to the excessive lending of a year or more ago," he said. "There does need to be some adjustment of the types of loans that were made in the mortgage market.

"It is to return the banking system... back to a state of normality. It is not part of the scheme to prevent desirable adjustments in the mortgage market from taking place."

Mr Cameron was speaking to the MEN after visiting Bury and Salford ahead of the local elections on May 1.

In Tory-run Bury, he attacked government plans for huge "polyclinics", saying they would force up to 1,700 GPs surgeries across the country - one in five - to close.

The polyclinics would house up to 25 GPs, open from 8am to 8pm, and have facilities for minor operations.

But Mr Cameron said: "It's a fad. It's going to be a huge waste of money."

Read David Ottewell's blog by clicking here.