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A further £25bn spending cuts - much of it from the welfare budget - will be needed after the next election, Chancellor George Osborne has warned.

He said more austerity lay ahead, as the job was "not even half done".

He suggested making welfare savings by cutting housing benefit for under-25s and restricting council housing for those earning over £65,000 a year.

But Deputy Prime Minister Nick Clegg said targeting the working-age poor was "extreme... unrealistic and unfair".

The Lib Dem leader said he had a "very different vision" from the Conservatives about how to balance the books during the next Parliament and believed the wealthy should pay more in tax.

The £25bn figure is in line with the already announced intention to balance the government's books by 2018. It suggests cuts will continue at the same rate as during the current Parliament.

BBC political editor Nick Robinson said Mr Osborne's announcement was as much about politics as economics.

Mr Osborne, he said, "wants to to set the political baseline for the economic argument in the run up to the next general election", in the process setting a test for both the Lib Dems and Labour.

'Long way to go'
In his speech, Mr Osborne warned the welfare budget could not "be protected from further substantial cuts", saying he was beginning "not ending" a debate on the "difficult choices" that he believed had to be made.

Only by reducing welfare, he suggested, could a future government avoid either spending cuts in areas such as education, "big tax rises", or increased borrowing.

Mr Osborne has argued the savings needed after 2015 can be found entirely from spending cuts, with welfare accounting for about half of the £25bn targeted - the remainder coming from a further squeeze on departmental budgets.

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