Kwasi Kwarteng has scrapped the planned abolition of the 45p top rate income tax in a dramatic U-turn after the controversial move sparked market turmoil and backlash from within the Tory Party.

The UK chancellor said that it was clear the cut announced a little over a week ago in his mini-budget had "become a distraction from our overriding mission to tackle the challenges facing our country".

The move would have seen the 45% rate on earnings over £150,000 abolished, and would have been paid for by borrowing around £2bn annually.

More than 14 Tory MPs, including former transport secretary Grant Shapps and Cabinet minister Michael Gove criticised the plans during a cost of living crisis.

Meanwhile, shadow chancellor Rachel Reeves has called for the government to reverse "their whole economic, discredited trickle-down strategy", saying the U-turn had come "too late for the families who will pay higher mortgages and higher prices for years to come".

Read more: Pound rallies on 45p tax rate U-turn

In a statement posted on his Twitter account, he said: "From supporting British business to lowering the tax burden for the lowest paid, our Growth Plan sets out a new approach to build a more prosperous economy.

"However, it is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country.

"As a result, I’m announcing we are not proceeding with the abolition of the 45p tax rate. We get it, and we have listened. This will allow us to focus on delivering the major parts of our growth package.

"First, our Energy Price Guarantee, which will support households and businesses with their energy bills. Second, cutting taxes to put money back in the pockets of 30 million hard-working people and grow our economy. Third, driving supply side reforms – including accelerating major infrastructure projects – to get Britain moving."

Kwarteng and Truss had been doubling down on their plans despite the financial turmoil triggered by the package, with the PM even defending it on Sunday.

The pair had even resisted backing down in the face of criticism from the International Monetary Fund and credit rating's agency Moody's last week.

But the controversial move, that was intended to boost UK growth, has spooked investors, and sent the pound to a record low against the dollar.

Sterling's fall produced higher import prices, surging mortgages resulted in warnings of a crash in the housing market, and concerns about skyrocketing borrowing costs.

Read more: Why has the pound fallen and what does this mean for you?

It also forced the Bank of England to take emergency measures, committing to buy £65bn in bonds to calm gilt markets after a sell-off, but that intervention is due to run out on 14 October.

Despite the U-turn, Kwarteng told BBC Breakfast on Monday that the government was still "100% focused on the growth plan".

Speaking on BBC Radio Four's Today programme he did not rule out a new era of austerity to pay for the remaining £43bn of tax cuts in his partial budget, nor did he say whether benefits will suffer real-terms cuts as inflation soars.

However he declined to apologise directly to the nation when pressed, instead saying that "there’s humiliation and contrition and I’m happy to own it".

Watch: Chancellor Kwasi Kwarteng has ditched plans to cut the 45p top rate of tax