Ananova:

A Tory government would offer companies a £2,500 National Insurance break for every new worker they take on who has been unemployed for more than three months.

Tory leader David Cameron said the £2.5bn scheme would pay for itself by reducing the future cost of unemployment.

He urged Prime Minister Gordon Brown to adopt the plan immediately, in order to prevent the numbers out of work from soaring further from its current level of 1.79 million.

Mr Cameron told a news conference:"One of the biggest worries for people is unemployment. It has hit nearly 1.8 million and is rising sharply.

"The modern Conservative Party will not stand aside and let unemployment claim lives.

"We know that every time someone leaves benefits and goes into work, it saves the taxpayer over £8,000 a year.

"We will use some of that money that otherwise would have been spent on unemployment benefits, to give tax breaks to employers."

But business' reaction to the Tories proposal has been lukewarm.

David Frost, director general of the British Chambers of Commerce, said: "This policy announcement would have been a valid welfare to work initiative in better times, but it is not a survival tool for small businesses during a severe downturn."

John Wright, national chairman of the Federation of Small Businesses, said: "Small businesses already have a good record of employing those out of work.

"They would be better helped by long-term reductions in National Insurance contributions rather than short-term breaks."

And Steve Radley, chief economist at the Engineering Employers Federation, said: "At a time when we are facing a wave of job losses, proposals focused on helping people back into work are missing the mark.

"The number one issue for companies right now is the need to maintain cashflow.

The announcement comes as the Conservatives and Labour go to war to seize the initiative on tax policy.

Mr Brown hinted on Monday that he would introduce tax cuts to help Britain out of recession.

The Government's measures are expected to feature in the forthcoming Pre-Budget Report, which could come out as early as next week.

But the Lib Dems, who have been calling for tax cuts for several weeks, accused the Government and the Opposition of playing politics with the issue.

"Labour and the Conservatives have been cynically raising expectations and hopes of tax cuts,"Nick Clegg told Sky News.

"All they're doing is, in the case of the Tories, timidity and tinkering, which doesn't help millions of ordinary British taxpayers who need help, and from the Labour Government, a promise to borrow money today to give tax breaks which we'll all have to pay for tomorrow."

Meanwhile, the Tories' lead over Labour has been dramatically cut, according to a Populus survey for The Times.

It has the Conservatives down four points at 41%, with Labour on 35 - up 5% - and the Lib Dems up slightly on 16%.

The poll also shows the PM and his Chancellor, Alistair Darling, have taken the lead as the most trusted to deal with the economy.