Philip Hammond has become embroiled in a sexism row after reportedly saying that trains are now so easy to drive "even a woman" can do it.
The Chancellor's comments were made in front of the whole cabinet and shocked female colleagues, including the prime minister, The Sun reported.
The sexist quip reportedly led to a withering slap-down from Theresa May.
Upon seeing the fury from other colleagues around the table, Hammond, 61, tried to dig himself out of the embarrassing hole but was interrupted by May, who said: "Chancellor, I am going to take your shovel away from you."
His remark was reportedly made during a discussion on rail strikes earlier this week, during which Hammond asked why it is so rare to see female train drivers.
The Chancellor, known for his dry sense of humour in private, argued that driving a train was so simple now that "even they can do it".
There are about 19,000 train drivers in Britain, 5.5% of which are female – up from 4.2% in 2012.
Pauline Cawood, 53, a train driver for more than 20 years, told The Sun that the chancellor's remark was "an old-fashioned, sexist comment."
She added: "Women are just as capable as men at driving trains. What's that man been doing for the past 50-odd years?
"Probably sat in a gentleman's club smoking cigars and drinking whisky."
Labour MP Jess Phillips added: "Philip Hammond has disgraced himself with this remark, as well as managing to insult half the country's population."
Friction between Number 10 and the Treasury was exposed during the election campaign, when there was speculation Hammond would be sacked by May and replaced with Amber Rudd following alleged clashes over the budget.
This latest incident comes as the prime minister's authority over her party has been dented amid speculation over a change in leadership.
The Conservatives' disastrous election result has led to the emergence of foreign secretary Boris Johnson, Brexit secretary David Davis and Hammond as potential candidates to replace May.
The Treasury refused to comment on Hammond's remark.