In last year’s Spring Statement, Hammond called the coppers “obsolete” and opened a consultation into the use of cash, leading to rumours they could be axed.

However, this weekend the Mail on Sunday quoted a government source as saying: “We will confirm the penny coin won’t be scrapped. You’ll still be able to spend a penny under this Government.”

An earlier Treasury review found that six in ten 1ps and 2ps are used in a transaction once before they are either saved or thrown away.

The Royal Mint has to issue over 50 million 1p and 2p coins each year to replace those falling out of circulation.

The 1p is now worth less in real terms than the half penny was when it was scrapped in 1985.

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Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Hammond is apparently going to let coppers off with a warning, and avoid going down in history as the penny pinching chancellor.

“This isn’t an enormous shock: he distanced himself from the idea the day after publishing a discussion paper. This kind of change is always difficult – it took a decade of debate before the axing of the halfpenny – and this may not be the ideal time to sell an unpopular idea.

“We can guarantee it’s only a matter of time before inflation makes the move inevitable – when we hit the point that the coins cost more to make and distribute than they are worth.”