Philip Hammond's allies have warned Theresa May that sacking him would deal a "crushing" blow to her authority and claimed he is the victim of a Eurosceptic plot.
The Chancellor was on Wednesday forced into a humiliating Budget reversal after the Prime Minister scrapped his plans to increase national insurance contributions for the self-employed.
Conservative MPs said that the fiascos had been "hugely damaging" to Mr Hammond's authority, with one saying he was "on probation".
However allies of Mr Hammond on Thursday hit back and insisted "he is going nowhere", adding that it would be "damaging" to Mrs May and Brexit if she did.
One ally said: "This is a plot by Eurosceptics. They have not forgiven him for backing the Remain campaign. He is going nowhere. It would be damaging to Theresa if he did."
The source conceded that the "embarrassing" reverse "has damaged him, but the notion that there is a serious rift between him and Theresa is ridiculous.
"This is just wishful thinking by a group of arch-Eurosceptics who have never got over the fact they cocked up the leadership contest."
Another source suggested that Mrs May could not sack Mr Hammond because they made the decision to raise National Insurance Contributions jointly. "They decided on this approach together," the source said.
The Prime Minister on Thursday said that she has "absolute faith" in Mr Hammond after he admitted that the NI rise had broken the "spirit" of the manifesto.
Asked if she had ever thought he should resign, the Prime Minister told ITV News: "I have absolute faith in the Chancellor. We made very clear yesterday - he and I - about the tax lock, that we recognised the spirit of the manifesto and the change has been made."
It came as an Ipsos Mori poll found that 46 per cent of voters are dissatisfied with the Chancellor, compared to 28 per cent in November last year.
The Telegraph disclosed earlier this month that a former Tory minister is convinced that rebel Tory MPs are trying to get Mr Hammond sacked because of concerns he wants to frustrate Brexit.
The former Tory minister, who backed Remain in the referendum, said: “Part of the strategy is for the hard Brexiteers [to unite].
“It is a 'get Philip Hammond who is going to f---- Brexit', as opposed to a genuine outrage. “They are hunting as a pack – they have decided it is an issue that they can use to weaken Philip or do him over."
A rebel MP - who voted Remain - told The Telegraph: "This is absolutely nothing to do with Brexit - it is completely unrelated to it. I was not happy with the deficit reduction target. I just don't think he is that good, Philip Hammond. I just don't think he is a Tory. I got into politics to reduce debt and the deficit."