Downing Street has said Rachel Reeves has the full backing of the prime minister after the chancellor made a tearful appearance in the House of Commons.

Sir Keir Starmer refused to say whether Reeves would remain in her job until the next election at Prime Minister's Questions, during which the chancellor, who was sat by his side on the front bench, was visibly upset.

Afterwards, Number 10 said Reeves was "going nowhere", while her spokesperson said she had been dealing with a "personal matter".

But the extraordinary Commons scenes appeared to unsettle the financial markets, with the pound falling against major currencies and the cost of government borrowing rising.

At a highly charged PMQs, Conservative leader Kemi Badenoch laid into the government's latest U-turn on welfare reform - which potentially blows a hole in Reeves' Budget plans.

She said the chancellor would now be forced to put up taxes "to pay for his incompetence" and asked if she would still be chancellor at the next election.

She said the chancellor "looks absolutely miserable".

And she told the PM: "Labour MPs are going on the record saying that the chancellor is toast, and the reality is that she is a human shield for his incompetence."

Sir Keir said: "No prime minister or chancellor ever stands at the despatch box and writes budgets in the future."

He insisted the welfare reform bill would get more people back into work and blamed Tory "stagnation" for creating the problems it was trying to fix.

He ignored Badenoch's question about the chancellor's future but his press secretary told journalists afterwards that Reeves had his "full backing" and was "going nowhere".

It come after Sir Keir was forced to scrap key parts of the government's welfare reform legislation at the last minute to head off a backbench rebellion.

The move potentially wipes out savings Reeves was counting on to meet her goal of funding day-to-day spending through tax receipts.

Reeves was seen to wipe away tears during the PMQs exchanges. Asked why she had been upset, her spokesman said: "It's a personal matter, which - as you would expect - we are not going to get into."

As Reeves left PMQs her sister Ellie Reeves, who is also a Labour MP, took her hand in an apparent show of support.

Following PMQs, Badenoch's spokesperson said a "personal matter doesn't really clear it up" as "you normally tell people what the personal matter is".

Shadow justice secretary Robert Jenrick went further than the Tory leader in an X video, saying the chancellor's career was now dead after an "embarrassing" U-turn and it was time for her to go.

But he later added: "I obviously hope that Rachel Reeves's personal matter is resolved. It's never nice to see someone upset. The PM had a chance to support her at PMQs but threw her under the bus."

He said borrowing costs were soaring and the pound plummeting because "the market has lost confidence in the government's ability to control spending".

Stephen Flynn, the SNP's Westminster leader, said: "Like almost all MPs I don't know why the Chancellor was upset in the chamber today, but I do hope she is okay and back to her duties this afternoon.

"Seeing another person in distress is always very difficult, and we are wishing her well."

Many colleagues and allies of Reeves in parliament are blaming an altercation with the Commons Speaker Sir Lindsay Hoyle for upsetting her.

Several have accused him of having been abrupt with the chancellor in a meeting before PMQs.

It is thought to have been about an interaction they had during Treasury questions on Tuesday in which Sir Lindsay asked her to give shorter answers.

However, no-one who the BBC has spoken to is claiming to have witnessed the interaction personally.

The chancellor's team have declined to comment, as has the Speaker's office.