Rishi Sunak is to make an announcement on his plan for jobs after the furlough scheme comes to an end.
The current scheme will end on October 31, a move which many are worried will lead to massive unemployment.
But after Boris Johnson's latest announcement on more restrictions, it is believed that the Chancellor will announce on Thursday a new type of wage subsidy to help workers.
According to Mirror Online, the Chancellor is said to be looking at a 'short working hours' scheme where workers would remain part-time and have some of their wage subsidised by the government.
He could also extend support to businesses in the form of loans and grants.
Meanwhile plans for a second 2020 Budget this autumn - which would have spelt out a long-term plan for after the pandemic - have been scrapped.
A source close to the Chancellor said: "No-one wanted to be in this situation but we need to respond to it.
"The Chancellor has shown he has been creative in the past and we hope that people will trust us to continue in that vein.
"Giving people reassurance and businesses the help they need to get through this is uppermost in his mind.”
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The need for new cash was ramped up this week after pubs were ordered to close at 10pm across England.
In Liverpool, under a local Merseyside lockdown, people are also banned from socialising with anyone outside their household in their home or garden.
The Chancellor tweeted: "As our response to coronavirus adapts, tomorrow afternoon I will update the House of Commons on our plans to continue protecting jobs through the winter." The statement is expected at around 12.30pm.
It came as new coronavirus cases in the UK soared to 6,178 in the past 24 hours.
Six months to the day since lockdown began in the UK, there have now been a total of 409,729 cases of Covid-19.
The latest figures from the Department of Health today includes cases in hospitals, care homes and the community.
The furlough scheme paid up to 80% of wages to a cap of £2,500 a month and supported more than 9million jobs.
A string of public figures including Bank of England governor Andrew Bailey have called on the government to “stop and rethink” furlough after October 31.
It has become clear many businesses will not be back to normal by then - and Boris Johnson has admitted 10pm curfews on pubs are likely to last six months.
The Guardian reports Mr Sunak is looking at a scheme like in Germany, where workers are kept on shorter hours - and then have part of their wage made up by the government.
It would subsidise people who work 50% to 60% of their normal hours, to spread out work and cut the need for redundancies.
This would be similar to demands from the Trades Union Congress, which published plans for a short-time working scheme.
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The proposal is understood to have the backing of business groups and the unions, although they varied on how much they wanted the Government to contribute.
Asked if the government was considering the German-style short working hours scheme, Boris Johnson’s spokesman said: “We’ve always said we would keep our support under review and it would be adapted as the circumstances evolved.”
And Boris Johnson told PMQs: “Of course the government is going to come forward with further measures.”
He added: “I don’t think it would be sensible simply to extend the current, existing furlough scheme in its present form beyond the end of October. But we will do everything we can do support businesses, to support those in jobs, and indeed the self employed.”
TUC chief Frances O'Grady urged the Government to "get around the table" with unions and employers to fast-track a new jobs protection plan.
She said: "With the right approach we can stop mass unemployment scarring millions".
Mr Sunak has said that the Government does not want to prop up jobs that no longer exist.
