A bitter row has erupted between Philip Hammond and welfare chief Esther McVey over claims of a £2 billion black hole in the Government's flagship benefits reform.

Relations between the two are said to be so bad that the Chancellor wants Miss McVey sacked and replaced with his deputy, Liz Truss.

One Treasury source even took aim at Ms McVey's immaculate hair, saying: 'The only thing she knows how to do well is a blow dry.'

Esther McVey leaves a Cabinet meeting at 10 Downing Street in central London

But allies of Miss McVey accuse Mr Hammond of lobbying for her removal because she stands up to the Chancellor and gets more cash for her Work and Pensions department.

The row emerged ahead of reports that Mr Hammond may be forced to use his Budget on October 29 to find more money to bail out the DWP over the controversial project to combine benefits into Universal Credit (UC).

The nationwide roll-out of UC, which merges six benefits, has been plagued by delays and soaring costs.

Iain Duncan Smith, the original architect of UC, is calling for an extra £2 billion to be put into the scheme to replace money cut from it by then-Chancellor George Osborne two years ago.

One Treasury source took aim at Ms McVey's immaculate hair, saying: 'The only thing she knows how to do well is a blow dry.'

But Miss McVey is infuriating the current Chancellor over how she is handling the initiative.

A Treasury source said: 'She obviously never deals with serious matters of state as there is never a hair out of place. She's a pain in the arse and costing us money.'

Last night, allies of Miss McVey hit back, claiming the only reason Mr Hammond wanted to 'install' Treasury Chief Secretary Ms Truss in the job is because she would be 'more pliant'.

One said: 'Esther has been a bit too successful in government for Hammond's liking – that's the problem.'

A spokesman for Mr Hammond denied he had any ambitions to replace Miss McVey with Ms Truss.

The spokesman insisted that Mr Hammond had very good relations with the Work and Pensions Secretary, and had hosted an event in London on behalf of Ms McVey's local Tatton Conservative constituency association only last week.