Secret “doomsday” plans for 20% cuts in public spending are being prepared by senior civil servants, who fear politicians are failing to confront the scale of the budget black hole.

Whitehall mandarins have begun creating detailed dossiers containing reductions in expenditure that are far deeper than the more modest savings being proposed by Labour and Conservative politicians.

The disclosure comes as Gordon Brown faces a mutiny inside No 10 over his failure to admit that a future Labour government would have to reduce public spending.

Downing Street advisers have warned the prime minister they are ready to quit unless he sacks the cabinet minister they blame for encouraging him to make misleading claims about budget figures.

They are demanding the removal of Shaun Woodward, the Northern Ireland secretary, who has a desk in Downing Street after being given a special role advising Brown on strategy.

The row threatens to undermine the prime minister’s attempts to relaunch his struggling government and find a coherent strategy to take on the Conservatives.

Senior civil servants have let it be known that they are sceptical about the claims made by both main parties on public spending.

While Labour wants to increase expenditure despite the £175 billion budget deficit, the Tories, using figures from the Institute for Fiscal Studies (IFS), have acknowledged the need for cuts of up to 10%.

Mandarins, fearing a prolonged recession and a collapse in tax revenue, have begun planning for more severe cuts of up to 20%.

The dossiers will be handed to cabinet ministers the day after the next general election, whichever party wins.

Jonathan Baume, general secretary of the FDA, which represents senior civil servants, said: “It could be even worse for some departments than the IFS has predicted.”

Lord Turnbull, the former cabinet secretary, echoed the warning. “The civil servants will have to assume that whatever both parties are saying today, in the end they will have to be bolder. What politicians say on the record will underestimate the magnitude of the task,” he said.

Steve Bundred, chief executive of the Audit Commission, the spending watchdog, said politicans had failed to be honest about cuts and called for “severe pay restraint” for public sector workers.

He said that health and education spending — which the main parties have been reluctant to touch — should be included in any cuts.

David Cameron’s shadow cabinet has been holding preliminary meetings with permanent secretaries to brief them about its plans.

Officials complain, however, that some shadow ministers have been vague about the types of savings they are seeking and warn that the civil service will have to “fill in the gaps”.

The proposals likely to be put forward by officials include reductions in spending on London Underground, renegotiating Labour’s generous pay deal for GPs and savage cuts in funding for local authorities.

The final “doomsday” reports will be written up only in the three weeks before the general election to reduce the risk of leaks. The documents will be colour-coded: blue paper for a Conservative victory, red for Labour and yellow for a hung parliament with the Liberal Democrats holding the balance of power.

The row over Woodward marks a return to the internecine warfare that has dogged Brown’s premiership. The Tory defector was given his No 10 role last month because of his inside knowledge about how the Conservatives operate.

However, a Downing Street insider has revealed that Woodward’s influence has triggered a bitter row behind the scenes, with senior figures including Lord Mandelson, the business secretary, blaming him for a “calamitous strategic miscalculation”.

The friction has become so serious that Mandelson refused to take part in a No 10 strategy meeting also attended by Woodward. The business secretary told the prime minister that he would not continue with the discussions until Woodward was ejected.

At least two senior aides last week warned Brown that Woodward was making their jobs “untenable”. One insider said: “Shaun is causing mayhem. Gordon trusted him to give sensible advice, but he has been a disaster. There are people who are ready to walk out if he doesn’t go.”

According to the Downing Street source, the sensitivity surrounding Labour’s election pitch on public spending reflects the absence of an alternative tactic to portraying the Tories as “cutters”.

“We have to get this right because there is no plan B,” the source said.

Insiders say Woodward has undue influence over the prime minister because “he is telling Gordon what he wants to hear”.

There are fears at the highest level that Woodward is jeopardising Labour’s election chances by encouraging the prime minister to stick to his mantra that Labour will continue to invest in public services, while the Tories will make cuts.

Philip Hammond, the shadow chief secretary to the Treasury, said the Conservatives were looking for “serious efficiency savings”, but refused to put a figure on how much would be cut from spending.

A Tory government would be determined to safeguard basic public services, said Hammond: “I hope civil servants are not simply going to sit around the table and come with a series of options which cuts everything at the front line and leaves the mandarins’ back office alone.”

Hammond revealed he had recently met a delegation of politicians from Canada, who were responsible for a radical 20% cut in spending imposed by the federal government in the 1990s.

“The psychological tactics they used to get ministers to work together, looking at it as a shared problem rather than a series of departmental problems, were important,” said Hammond.

The two architects of Canada’s programme review, Jocelyne Bourgon, who was the country’s top civil servant, and Marcel Massé, a former minister, cut 47,000 civil service jobs.

Under the programme review, ministers and officials were required to assess all the activities of the government “to identify those that no longer served a national purpose or could be delivered more efficiently through other means”.

Subsidies were cut, particularly for transport and agriculture, and many of the activities of government departments were scrapped, pared back or transferred to the private sector.

Downing Street described the allegations about Woodward as “silly and untrue”.

A spokeswoman for Woodward said: “Shaun has known Peter {Mandelson} extremely well for more than 18 years and holds him in the highest regard. We are not going to get into a commentary on claims from anonymous sources.”

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