Osborne (pictured) announced there will be a 41 per cent reduction in the department's administration costs, including the abolition or substantial reform of 19 quangos, with the end result equating to a 15 per cent cut to frontline funding for the sport arts over the next four years.

Osborne said: "All of this is being done so we can limit four-year reductions to 15 per cent in core programmes like our national museums and the frontline funding provides to our arts and Sport England's Whole Sport plans."

Cultural Secretary Jeremy Hunt, who watched nervously from the side, did receive a small dose of good news though, as Osborne said the London 2012 budget of £9.3 billion ($14.7 billion) will be left untouched.

Nearly all the major contracts for London 2012 have been awarded, leaving little scope for major savings at this late stage.

The DCMS and the Olympic bodies had successfully argued that it was better to leave the contingency in place rather than take it back and risk having to pay out in the event of an unforeseen crisis in the project.

Hunt will also be pleased that free entry to the country's museums and galleries will continue but it remains to be seen what Sports Minister Hugh Robertson will be able to do with a severe lack of funds now available to him.

Despite the severity of the cuts, a defiant Osborne described the measures as "tough but fair".

"Today's the day when Britain steps back from the brink, when we confront the bills from a decade of debt," he said.

"To back down now and abandon our plans would be the road to economic ruin.

"We will stick to the course.

"We will secure our country's stability.

"We will not take Britain back to the brink of bankruptcy."

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