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Mr Osborne said there were 'tentative signs of a balanced, broad-based and sustainable recovery' but stressed that it was still at the early stages.

But the Chancellor rounded on critics as he claimed the new outlook for the economy had 'decisively ended' questions about his economic policy.

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The speech comes ahead of the Conservative Party conference later this month, and after a number of forecasts and surveys pointed to an acceleration in the UK's economic recovery.

Revised gross domestic product figures showed the UK economy grew by 0.7% in the second quarter of the year, with predictions it could reach 1% for the third quarter.

Mr Osborne said: "The economic collapse was even worse than we thought. Repairing it will take even longer than we hoped.

"But we held our nerve when many told us to abandon our plan. And, as a result, thanks to the efforts and sacrifices of the British people, Britain is turning a corner.

"Of course, many risks remain. These are still the early stages of recovery. But we mustn't go back to square one. We mustn't lose what the British people have achieved.

"This is a hard, difficult road we have been following. But it is the only way to deliver a sustained, lasting improvement in the living standards of the British people."

He added: "Those in favour of a Plan B have lost the argument."

Opposition leader Ed Miliband will use his speech to the TUC conference to say the Chancellor is 'out of touch with ordinary families' by 'congratulating themselves on the economy'.