This is just the start – warning of more painful cuts to follow

Chancellor George Osborne and his Liberal Democrat Treasury partner David Laws promised more pain in next month's emergency Budget and a full spending review later this year but insisted they were "getting a grip" on the economy.

The decision to scrap Child Trust Funds – which gave every child a 250 voucher to be invested on their behalf – from next year went further than the Tory proposal to simply limit them to the poorest families, and will save 320m although Mr Laws admitted there would be "disappointment to some parents".

University hopefuls were warned they may face disappointment as funding for 20,000 extra places this year was halved, Quangos face 600m of cuts and a pledge of one-to-one tuition for struggling pupils is also under threat despite overall funding for schools being protected.

In an attempt to show the pain is being shared, Ministers were ordered to get used to walking or using public transport as the budget for ministerial cars was slashed and civil servants face a clampdown on first-class train travel as part of a 1.15bn cut in "discretionary" spending areas, which will also reduce advertising and consultancy budgets.

While most of the savings will go towards paying down the deficit, there was a 500m sweetener in the form of 50,000 new apprenticeships, money for Further Education colleges, respite care for the parents of disabled youngsters and a freeze on backdated business rates bills which had threatened the future of port firms around the Humber.

The Government also promised 170m to fund the building of 4,000 social rented homes after claiming Labour had made 780m of promises on housing without having any money to fund them.

Announcing the cuts alongside the Chancellor, Chief Secretary to the Treasury Mr Laws said he wanted to send a "shockwave" through Whitehall to expose areas of spending which were unacceptable.

"This is only the first step on what will be a long road to restoring good management of our public finances," he said.

"Even tougher decisions undoubtedly await us in the Budget this year and in the autumn spending review if we are to restore responsibility after the years of Labour extravagance and mismanagement of our public finances."

The biggest loser is the Business Department headed by Lib Dem Vince Cable, which is losing 836m from its budget including 200m from the universities budget which will see 10,000 extra places scrapped, leading to criticism from students and universities alike.

Department for Education spending is being cut by 670m – although the schools budget will now be protected this year, along with the NHS, defence, Sure Start, 16-19 education and international development.

Mr Laws will head an "efficiency and reform group" with Cabinet Office Minister Francis Maude to help push through the savings quickly and hold bodies to account.

"That is what this new Government is all about," said Mr Osborne. "Rolling up our sleeves, getting on with the job, working together in the national interest, delivering on our promises, getting a grip."

The cuts also include saving 1.16bn in individual grants to councils, 1.7bn from delaying and stopping contracts and projects undertaken by Labour, 170m on property costs, 95m on information technology, and a recruitment freeze in the civil service for the rest of the financial year saving 120m.

Shadow Chancellor Alistair Darling called for the coalition to "come clean on the detail of what these cuts mean" and demanded to know how many jobs would be lost as a result of the measures, warning support for business would be hit while young people would have fewer jobs.

But the Confederation of British Industry said the cuts were "painful but necessary".

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