Chancellor Rachel Reeves has reportedly halted plans for a huge pensions tax raid after she was warned it would hurt public sector workers including teachers and nurses.

Amid warnings Labour is intent on inflicting further harm on pensioners beyond scrapping the Winter Fuel Allowance, Ms Reeves had hope to raise funds by reducing tax relief on those earning just £50,000 a year.

However senior Treasury officials told the Chancellor that reducing the current 40 percent level of tax relief would hit those in good jobs who had dedicated their lives to the public sector.

In one example, a nurse earning £50,000 would face an additional tax bill of up to £1,000 a year.

A senior Government source told the Times that such a move would be “madness” given the Treasury has spent the months since the General Election going to great efforts to give public sector workers huge pay rises.

The move comes after Labour dropped plans to reintroduce the pensions lifetime allowance cap in June, after similar warnings it would impact long-serving doctors and public servants, and force many much-needed professionals into early retirement.

The cap was scrapped by Jeremy Hund during the previous government as part of an attempt to bolster NHS staff numbers, with Ms Reeves blasting the move and pledging to bring it back in order to raise £800 million a year.

Steve Webb, a former pensions minister, warned that a pensions tax raid would lead to public sector employees having to pay 20 percent extra tax on the proportion of their salary paid into a pension, costing them hundreds of pounds a year.

He warned: “I don't think this is something that Reeves will want to do, not least because it will infuriate public sector unions just weeks after the government agreed pay settlements with them.”

Unions have also been furiously lobbying against the changes, with chair of the BMA pensions committee Vishal Sharma blasting: “Attacking our pensions in this way would completely reverse this progress by once again taking money away from doctors in a different way.

"Not only would this negate the recent hard-won pay rises but it would likely reignite the recent pay disputes that have been seen across the NHS.”

However pensioners can’t afford to breathe a sigh of relief yet.

Some are still suggesting Ms Reeves could fill the disputed £22 billion black hole by reducing the amount of money people are allowed to take out of their pension pots tax-free when they retire.

The amount is currently set at £268,275, and costs the Treasury around £5.5 billion a year.

Yesterday Silver Voices Director Dennis Reed also warned that Keir Starmer is eyeing up pensioners’ free prescriptions and bus passes after taking the decision to cut Winter Fuel Payment.

He wrote for the Express: “If the Government successfully rides out this storm, they will inevitably squeeze senior citizens further, perhaps by means-testing free prescriptions, bus passes and even the state pension itself.

“It is time for older people to fight for our dignity in our remaining years on this planet.”