Bush under pressure to increase debt relief for Third World

Gordon Brown stepped up the pressure on George Bush to agree to huge increases in debt relief and financial support for the Third World despite his strong opposition to proposals for a doubling of aid.

The Chancellor insisted that a deal could be done at the G8 summit next month to eradicate debts owed to the World Bank and the International Monetary Fund.

Mr Brown believes he is close to a deal on writing off World Bank debt. He talked up prospects of a breakthrough on writing off IMF debt despite US opposition to a revaluation of the fund's gold reserves.

The Treasury is also hopeful of progress on plans for a dramatic increase in aid to Africa, despite President Bush's trenchant opposition to Mr Brown's proposals for an international finance facility (IFF) to mobilise billions of dollars worth of additional aid up to 2015.

Speaking at the start of an intensive round of negotiations ahead of next month's Gleneagles Summit, Mr Brown indicated that he was confident of ''real movement'' towards reforming trade rules to help the developing world. He said: "We want to see all countries agree to remove export subsidies and all trade-distorting support to agriculture, which work against producers in the developing world."

On Wednesday President Bush made it clear he would not drop his opposition to Mr Brown's IFF plans, which would increase financial help for Africa over the next decade by borrowing against long-term aid pledges from industrialised nations.

But Mr Brown insisted that plans for a pilot IFF to fund a massive vaccination programme would go ahead.

The Chancellor said the Americans were already behind moves on debt relief. "I believe the Americans are prepared to support the proposal for 100 per cent debt relief for the poorest countries.''

He also confirmed that he would waive the estimated £500,000 VAT bill for the Live 8 concert in Hyde Park next month.