George Osborne will still be Chancellor at the next election due in 2015, David Cameron has told Sky News.
The Prime Minister, in an interview with Kay Burley, gave strong backing to Mr Osborne who has faced intense criticism in recent weeks.
There have been rumours that the Chancellor could be replaced at the Treasury by William Hague in a reshuffle next month.
But Mr Cameron insisted his closest ally in Government was staying put and would handle the economy until the country goes to the polls again.
"George Osborne is doing an excellent job in very difficult circumstances and he has my full support in going on and doing that job," he said.
Asked if he would still be the Chancellor at the next Election, Mr Cameron replied: "He's not going anywhere - yes."
It is highly unusual for a Prime Minister to publicly confirm that a minister is keeping their job ahead of a reshuffle.
Critics could argue that Mr Cameron now has no room to manoeuvre, even if the economy goes from bad to worse and Britain loses it's AAA credit rating.
His declaration of support for Mr Osborne comes as the coalition is under major pressure over its economic policy and austerity measures.
Woeful growth figures last week showed the UK economy is now in the worst double dip recession in 50 years.
Shock data revealed a 0.7% slump in GDP between April and June, sparking fresh criticism of Mr Osborne who has been on the back foot since his Budget in March.
Mr Cameron is widely expected to carry out his first reshuffle of the coalition in September, after a torrid last few months in Government.
There has been speculation about the fate of a series of ministers as well as Mr Osborne, including Culture Secretary Jeremy Hunt and Health Secretary Andrew Lansley.
The Prime Minister said he would not take part in "reshuffle bingo" but added that the Olympics showed Mr Hunt and his department had "self-evidently done a very good job".
As the economy continues to struggle and following a series of Budget U-turns, Labour leader Ed Miliband has called on Mr Osborne to adopt a new approach.
Outspoken Tory backbencher Nadine Dorries has also called for the Foreign Secretary to take over as Chancellor.
And Tory peer Lord Ryder said Mr Osborne should "of course" be stripped of his role in charge of political strategy for the Tories.
"The Treasury deserves the Chancellor to be there on a full-time basis and to ensure it develops a proper economic strategy," he said.
Business Secretary and senior Lib Dem Vince Cable was last week forced to deny that he was angling for Mr Osborne's job, although he did admit he would "probably" be good at the role.
Sky News' Political Editor Adam Boulton says the conventional wisdom is that Mr Cameron could not sack his closest ally in politics but that suddenly "a few worms are beginning to turn".
He wrote: "They may be friends but if it comes to a choice between relaunching his Government with a fresh economic policy or losing Mr Osborne, I doubt that Mr Cameron would hesitate for a second."
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