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The Liberal Democrats have revealed plans to save most workers hundreds of pounds a year in income tax ahead of the Budget on Wednesday.

Leader Nick Clegg outlined his party's proposals to increase the personal tax allowance to £10,000 in a bid to reform a tax system he believes has come to favour the rich at the expense of the ordinary worker.

Mr Clegg said: "The Liberal Democrats are proposing a permanent, £700 tax cut for almost every worker in Britain by raising the income tax threshold.

"We are proposing a £17 billion tax switch away from ordinary working people and on to the big businesses and millionaires who've benefited for decades from unfair loopholes and exemptions.

"For too long governments have been letting companies stash their money in offshore tax havens while taxpayers are left to foot the bill."

The Lib Dems outlined how it would pay for this tax cut, unveiling a raft of measures including clamping down on stamp duty and corporation tax avoidance, and subjecting benefits in kind to national insurance contributions.

There are also plans to restrict tax relief on pension contributions and levy taxes on planes per aircraft, rather than on a per passenger basis.

Mr Clegg added: "People who say there isn't enough money to make our tax system fair are wrong. Our plans wouldn't add a penny to the overall tax burden, but they would spread that burden far more fairly.

"Far from making this reform difficult, tight government finances and a harsh recession make it absolutely vital. It will help millions of low and middle income taxpayers who are most likely to spend money so helping the wider economy."