Chancellor George Osborne and Prime Minister David Cameron have announced that the government will not be introducing a mansion tax - a Liberal Democrat suggestion - to target the wealthy.

As the Tories kick off their annual party conference in Birmingham, the PM has vowed to introduce 'further action to ensure rich people pay their fair share' but has yet to provide any detail.

He also said the coalition will not be introducing new council tax bands for the more expensive properties.

This is likely to cause friction with the Liberal Democrats as they have previously said that they will only agree to touch new austerity measures if there are more levies on the wealthiest members of society.

Osborne told Sky News: 'I don't think the mansion tax is the right idea because I tell you before the election it'll be sold to you as a mansion tax then after the election a lot of the people in Britain are going to wake up and find their more modest homes have been reclassified as a mansion.

'Nor do I think it's sensible to have a wealth tax in the sense of a tax on your wealth levied annually.

'But I'm very clear that the rich will have to make a contribution to closing the budget deficit.'

The PM has announced that there will be another £16bn of deep cuts in the 2015/16 financial year.