At the Labour Party conference in Manchester, Chancellor Alistair Darling is set to promise action over weaknesses in the financial system, pledging to avoid “knee-jerk” reactions, taking measured decisions for long-term stability instead.

His speech comes as financial experts say taxes will have to rise as borrowing soars.

In an interview with the BBC, Mr Darling was asked if income tax is likely to go up, instead of a straight “yes” or “no”, he replied: “it is not the time to take money out of the economy”.

When asked to explain his answer, Mr Darling said that the time to pay back debt was when the economy is doing better.

He added that at the moment, rather than increasing taxes, basic rate tax payers were paying less tax this month.

The chancellor will fly with the Prime Minister Gordon Brown from the conference to New York in an effort to establish an international agreement for tighter regulation of the financial sector.

On Sunday, Mr Brown told the BBC he was considering a crackdown on “irresponsible” City bonuses which encouraged risk-taking and a level he believes is “excessive”.

Mr Darling’s keynote speech should see him commit to taking whatever steps necessary to tackle turmoil in the markets, but he will also warn that solutions to the problems of globalisation will or be found by one government alone.

Mr Darling will say: “Just as one government alone cannot combat global terrorism, just as one government alone cannot deal with climate change, one government alone cannot deal with the impact of globalisation.

“In the next few weeks Gordon and I will be in the US and in Europe and speaking to finance ministers around the world to put in place measures to help prevent the mistakes and misjudgements which caused the crisis.”

In the meantime, unions are expected to use the conference to demand a windfall tax on energy firms to help households below the poverty line to pay their gas and electricity bills.

The demands for a levy will be spearheaded by Unite general secretary Tony Woodley; however, due to a rule change, unions and activists will not be able to force a vote on whether to make such a tax Labour Party policy.