A Government minister close to Sir Keir Starmer today appeared to confirm he is resigning.

Jacqui Smith said she ‘would have been happy for him to continue’ as Prime Minister.

Her use of the past tense has been taken as tacit confirmation his resignation is imminent.

The Prime Minister returned to Downing Street from Chequers early this morning, with his position hanging by a thread. An announcement that Sir Keir will step down to make way for Andy Burnham could come as soon as today.

Baroness Smith, who was elevated to the House of Lords by Mr Starmer two years ago, revealed the Labour leader has spent the weekend considering his future.

Education minister Baroness Jacqui Smith told Times Radio: ‘My understanding from those I’ve spoken to who are close to the Prime Minister yesterday is that he has spent the weekend thinking very carefully about the future of the country and what is the best thing to do for the British people.

‘He has also, of course, been engaged in government — responding to the terrible train crash, speaking to the chief executive of the East Midlands Ambulance Service, and responding to the attack in Edinburgh.

‘But he always thinks carefully about the future of this country and the interests of the British people — he puts them ahead of the interests of the party — and he will make his own decisions in light of what everybody can see is a considerable amount of pressure and turbulence.’

Sir Keir Starmer handed her a peerage two years ago and then brought her into his top team.

Ms Smith made a comeback to politics as a peer having previously lost her seat as an MP in 2010.   

There was anger by some critics who said Mr Starmer should not send the expenses-scandal former Labour cabinet minister to the Lords.

Last night Donald Trump declared Keir Starmer 'will resign' as he fuelled expectations the Prime Minister will announce he is quitting Downing Street on Monday.

The US President, who met with Sir Keir at last week's G7 summit in France, waded into Labour's leadership crisis to claim Sir Keir will be standing down.

'Keir Starmer will resign as Prime Minister of The United Kingdom,' he posted on his TruthSocial site in his latest intervention into British politics.

'He failed badly on two very important subjects- IMMIGRATION AND ENERGY (OPEN NORTH SEA OIL!). I wish him well! President DJT'

The PM is said to have reached the conclusion that his position is no longer tenable after talking to Cabinet colleagues, No 10 advisers, union leaders and key Labour donors.

Sources insisted Sir Keir, who is this weekend discussing his future with his wife, Victoria, at their country retreat Chequers, had yet to make a final decision. 

But while the PM considers his position, it is not yet known if Mr Burnham will succeed Sir Keir unchallenged or whether Labour MPs will insist on a full-blown leadership contest against a rival such as Wes Streeting.

Andy Burnham is being urged to tear up Labour's tax pledges to fund his costly spending plans.

The challenger to Sir Keir Starmer's leadership made a series of expensive commitments during his by-election campaign – but is yet to set out how he will fund them. 

While fighting for the Makerfield seat, Mr Burnham said he would honour Labour's manifesto tax pledges, which include not raising income tax, National Insurance or VAT. 

But allies of the new MP are now pushing him to drop the pledge or risk being 'hamstrung' in office.

Labour ministers and MPs on the Left of the party have rallied around Mr Burnham – including his right-hand woman Louise Haigh, Anneliese Midgley, who helped to run his campaign, and Energy Secretary Ed Miliband.

One pro-Burnham minister told the Daily Mail: 'That manifesto was written at a certain point in time but so much has changed. I think Andy has an opportunity to say he's a new PM and in order to bring about real change, it is going to require some big changes.

'That includes on tax, where he is going to need to raise revenues to deal with the huge pressures in defence, in the NHS, in getting our high streets where they need to be... I think if we stick to those tax pledges he is going to be hamstrung from the start and people could become disillusioned very quickly.'

The outgoing Greater Manchester mayor has committed to slashing business rates for pubs and hospitality venues, nationalising water, energy and transport, a massive investment in council housing and a revival of the northern leg of HS2.

Mr Burnham is yet to outline how he will pay for these promises, made in the heat of his by-election campaign, which could cost taxpayers tens of billions of pounds.

Government estimates put the cost of nationalising the water industry alone at about £100billion – meaning Mr Burnham could have to look again at the tax commitments Labour was elected on in order to find cash for his economic agenda. Last night the Tories warned Mr Burnham's spending plans will damage the economy, as they said that he has 'high taxes, high borrowing in his DNA'.

Shadow Chancellor Sir Mel Stride told this newspaper: 'Andy Burnham wants to tear up Labour's already disastrous economic legacy and go even further. This will punish hard-working people who do the right thing.

'Rachel Reeves has raised taxes by over £60billion while letting the welfare bill spiral out of control. Burnham wants to double down on all her mistakes, with yet more taxes and more reckless spending and borrowing.'

Mr Burnham, photographed in Cheshire yesterday wearing Birkenstock sandals ahead of his return to Westminster today, spooked the financial markets last year when he said the Government should be less 'in hock' to the bond markets. But during his by-election campaign, he said he supported the Chancellor's fiscal rules – U-turning just weeks after suggesting they could be changed to fund defence spending.

There are those around Mr Burnham still advocating for such a move. On Friday Lord O'Neill, a former Treasury minister, said the Government should be 'bolder about borrowing to invest'.

The economist, who Mr Burnham has drafted in to boost his team of advisers, suggested more could be done to 'explore' Rachel Reeves's fiscal rules in order to boost spending.

UK gilt yields, which determine the cost of government borrowing, rose after Mr Burnham's victory cleared the way for his bid to oust Sir Keir. During his campaign he was likened to Robin Hood's 'Sheriff of Nottingham' after he boasted of hitting Manchester with the highest tax of any mayor.

Reform UK's Treasury spokesman Robert Jenrick last night warned that 'Burnham will show his true colours' upon entering No 10. 

'Higher taxes to fund wasteful Net Zero spending, houses for illegal migrants, and benefits for those who don't need them,' he said. 'Labour never changes and working Britons will be forced to pay for it all.'

Meanwhile, Business Secretary Peter Kyle told Sky News that Mr Burnham must maintain 'fiscal discipline'. 

Ms Reeves's fiscal rules state that day-to-day spending must be matched by tax revenues, so that Labour can only borrow to invest and not to fund spending.