It follows a spat with Business Secretary Kwasi Kwarteng, who told broadcasters last month he was in talks with the Treasury over a rescue deal for industries hit by soaring energy prices.
The claim prompted a stunning rebuke, with a source from Mr Sunak’s department accusing Mr Kwarteng of ‘making things up in interviews’.
However, the Chancellor faced embarrassment after the Prime Minister sided with the Business Secretary.
Chancellor Rishi Sunak has blocked a proposed rescue deal for the manufacturing sector after weeks of disagreement with the Prime Minister and Business Secretary Kwasi Kwarteng
No 10 ordered the two departments to work together on a possible solution, which led to Mr Kwarteng submitting a proposal for taxpayer cash.
Options put forward included Government-backed loans and subsidies on energy prices for struggling firms.
Mr Johnson was understood to have been convinced that sectors including steel, chemicals and ceramics needed help and was preparing to sign off a bailout worth hundreds of millions of pounds.
But the Daily Mail can reveal that Mr Sunak has successfully stopped the plan,