The government's new tax and spending watchdog was plunged into fresh controversy last night after it was revealed that the Office for Budget Responsibility slashed its forecasts for expected job losses from George Osborne's austerity package in the days leading up to last month's budget.

Treasury sources confirmed that the OBR had made "methodological changes" to its forecasts in the 10 days leading up to the chancellor's emergency package of measures which led to a far smaller reduction in public sector employment over the next five years.

The OBR said last week that 499,000 jobs would be lost in the public sector as a result of the deepest cuts in government spending since the second world war, but reduced the total by 175,000 after making assumptions about pensions and pay.

A Treasury spokesman denied last night that any pressure had been put on the OBR to make its forecasts for job losses more politically acceptable to the coalition government. "The OBR themselves made some methodological changes between the pre-budget report and the budget. The Treasury did not put any pressure on the OBR to make the employment forecasts more favourable to the government."