George Osborne urged to resign after 'scorched earth' referendum campaign

Speaking last year Mr Cameron said: “There definitely comes a time where a fresh pair of eyes and fresh leadership would be good, and the Conservative Party has got some great people coming up – the Theresa Mays, and the George Osbornes, and the Boris Johnsons.

“You know, there’s plenty of talent there. I’m surrounded by very good people.”

He added: “I’ve said I’ll stand for a full second term, but I think after that it will be time for new leadership.

“Terms are like Shredded Wheat – two are wonderful but three might just be too many.”

According to friends he is now considering life as a back-bencher for the remainder of the Parliament. “He loves spending time in his constituency,” a friend said.

65 Tories signed a letter refusing to back Mr Osborne's Brexit Budget in the House of Commons, effectively blocking it because of the party's slim majority. 

Iain Duncan Smith, Liam Fox and Owen Paterson, all former cabinet ministers, also signed the letter which warned  Mr Osborne's position would be "untenable" if he attempted to carry out the plan. 

One eurosceptic minister said: "George is finished. I would be astonished if he stood as a leadership candidate. He is a very astute political operator and I'm certain he can see that it's over."

Another said: "It's going to be difficult for him to be respected and to stay on after what he did during the campaign."

Mr Cameron has vowed not to interfere in Conservative leadership race and views his responsibility as being to "steady the ship" and help ensure an orderly transition.

Speaking last year Mr Cameron said: "There definitely comes a time where a fresh pair of eyes and fresh leadership would be good, and the Conservative Party has got some great people coming up - the Theresa Mays, and the George Osbornes, and the Boris Johnsons.

"You know, there's plenty of talent there. I'm surrounded by very good people."

He added: "I've said I'll stand for a full second term, but I think after that it will be time for new leadership.

"Terms are like Shredded Wheat - two are wonderful but three might just be too many."

According to friends he is now considering life as a back-bencher for the remainder of the Parliament. "He loves spending time in his constituency," a friend said.

"He certainly has no intention of returning to front-line politics."