Gordon Brown’s Trade Minister yesterday backtracked on his claims that a Treasury crackdown on nondomiciled foreigners would threaten London’s role as a finance centre.

Lord Jones of Birmingham raised the Treasury’s ire by saying that its plans to charge “nondoms” who have lived in Britain for seven years an annual fee of £30,000 made it harder for him to sell Britain to skilled overseas workers.

But while Lord Jones, the former head of the CBI, said that his remarks had been taken out of context, top executives and accountants rallied behind him. They said that many talented professionals were considering moving from London to avoid the rules, which will bring their tax dealings under new scrutiny.

Andrew Tailby-Faulkes, tax partner at Ernst & Young, described the Treasury’s proposals as “brutal and vicious”. “At least half of our nondomiciled clients are seriously thinking about leaving the UK,” he said. “They are all saying that, regardless of what happens now, the damage has already been done and that a breach of trust has already occurred.”

Stuart Popham, senior partner at Clifford Chance and a member of the Chancellor’s City advisory group, defended Lord Jones’s comments. “I’m convinced that he’s saying this because he’s hearing it. We’re hearing the same conversations.”

The Treasury is consulting on the rules, which it hopes will raise an extra £650 million a year in tax.

About 100,000 people work for investment banks in London, of which 40,000 are nondom. About 30 per cent of these have been in the UK more than 7 years. A chairman at one bank said: “Digby Jones is absolutely spot on. We’re very concerned about it, we think it’s bad news and we’d like the Government to admit that the issue is more complex than it first thought and needs rethinking.”

The chief executive of a leading UK company said: “The signal they’re sending isn’t a positive one. It’s very clearly signalling to top talent that the UK is slightly more ambivalent about them than has been the case. The people who will be affected are very mobile.”

The Treasury is believed to be particularly annoyed by the comments because it is currently considering making modifications “at the edges” to some of the proposals. Lord Jones’s intervention is the latest by one of Mr Brown’s “Goats” – so-called because of his claim to be creating a “Government of all the talents” - to cause embarrassment to ministers.

Yesterday, Treasury officials insisted that the tax package – less harsh than one put forward by the Conservatives – was fair. But they made plain that it was still being consulted upon, at least allowing the possibility that changes could be made.

The Treasury is believed to be looking at arguments raised by nondoms against associated plans to prevent them using offshore trusts to avoid tax being paid on gains, even when they are remitted to Britain.

Mr Darling will announce a final decision in the Budget on March 12. Yesterday’s intervention from Lord Jones found little support from the Conservatives, who are proposing to raise much more than the Government by introducig a £25,000 charge on nondoms, which would apply to all and not just those who have been in Britain for seven years.

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