Downing Street has insisted Boris Johnson has full confidence in Chancellor Rishi Sunak - but did not deny reports that the Prime Minister had called for him to be demoted.
Tensions between No10 and No11 have mounted in recent weeks after the PM was said to have been furious over a leaked letter from Mr Sunak calling for travel restrictions to be eased.
Mr Johnson reportedly threatened to demote Mr Sunak to Health Secretary last week in a fiery Downing Street meeting.
The PM was said by officials in attendance to be “apoplectic” about the leaking of a letter from the Chancellor that criticised the Government’s borders policy.
No10 sought to downplay reports of strife between the two men and insisted there were no imminent plans for a Cabinet reshuffle.
But the PM's spokesman failed to deny reports that Mr Johnson had threatened to demote his Chancellor.
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The spokesman said: "The Prime Minister and the Chancellor have always enjoyed a close and effective working relationship, and will continue to do so."
Asked to deny he made the remark, the spokesman said: "I'm not going to get into internal meetings.
"I would just say you can see particularly during the pandemic they have worked closely together and been in lockstep during this incredibly challenging period for the country."
It comes as a senior Cabinet minister admitted there was a "slight creative tension" between No 10 and No 11.
Business Secretary Kwasi Kwarteng defended the Chancellor saying he was doing a "fantastic job" - but admitted any reshuffle was "up to the Prime Minister".
He told the Today programme: "There are always disagreements, there’s always going to be a slight creative tension perhaps between No10 and No11.
"I can’t remember a time in the last 30 years when there haven’t been debates and conversations between the prime minister and the chancellor.
“I happen to think as I’ve said that this prime minister and this chancellor are working very closely together and they are as a cohesive as any kind of relationship of that kind that I’ve seen."
But polling suggests Rishi Sunak remains more popular than Boris Johnson among both Conservative members and the wider UK public.
And one ally of the Chancellor told The Telegraph a demotion would effectively end Mr Johnson's political career, saying: “If he demotes him he's only signing his death warrant.
"There's nobody else as good as Rishi.”
