Tensions are at breaking point in the Conservative party after Prime Minister David Cameron appeared to place the blame for the row over disability cuts squarely at the feet of Chancellor George Osborne. The split in the Tory leadership has been pushed into the open following the resignation of Work and Pensions Secretary, Iain Duncan Smith (IDS), who slammed the Budget as "deeply unfair" on 20 March and warned of further social divide.

Conservative sources have warned that Cameron and Osborne's "unbreakable united front is coming under pressure for the first time". Speaking to The Times, one cabinet source said: "Cameron said in no uncertain terms that Osborne had messed up, it was all his fault and would have hell to pay in the papers." The prime minister will give a statement to the House of Commons on 21 March following IDS' walkout, Sky News reported.

But the claim was refuted by a senior Downing Street employee, who said: "The prime minister does not believe the chancellor was responsible for what happened. They are working as closely as they ever have done."

The party has been rocked since IDS resigned in protest against Osborne's cuts to disability benefits on 18 March. But critics have linked the former Conservative leader's decision to step down to his views on the EU, with pensions minister Ros Altmann saying it was "all about Europe."

The rift between Cameron and Osborne appears to run beyond the Budget, with the prime minister reportedly frustrated by the chancellor's failure to "vociferously" support his efforts to keep Britain in the EU. "There is a feeling that it's been a bit too much about George's leadership recently – rather than what the Government is doing," a source told the Telegraph.

A key test will come on 22 February, with the Commons set to vote on Osborne's finance bill, which enforces the measures set out in the Budget. As the government runs the risk of moving further away from its "One Nation" vision, IDS' successor Stephen Crabb confirmed that cuts to personal independence payments (PIP) will be ditched.

"We still do need to make difficult, challenging decisions about how we manage our finances," he told BBC radio. "We're still running a deficit that's too large for our nation but we are clear those cuts to PIPs, we won't be taking those forward."