Public sector net debt will reach 54% of GDP this year, increasing to 75% in 2014/15, and beginning to fall the year after that.
A policy of immediate cuts to public spending would be both wrong and dangerous and would risk derailing the recovery, said the Chancellor.
The Chancellor made no further announcements on VAT, income tax or National Insurance rates.
Duty on beer, wine and spirits will increase as planned from midnight on Sunday. Alcohol duties will also increase by 2% above inflation for two further years from 2013.
The planned increase in fuel duty and landfill tax will continue for one year from 2014. Duty on cider will increase by 10% above inflation from midnight on Sunday.
Tobacco duty will increase from today by 1% above inflation and then increase by 2% in real terms each year until 2014. Inheritance tax threshold will be frozen for a further four years to help pay for the cost of care for older people.
The Government's tax plans will raise £19 billion towards reducing borrowing. The Government is to stick to its spending plans for next year, with a 2.2% real terms increase.
More than £4 billion from next year's reserve will be allocated to fund operations in Afghanistan.
The next spending settlement, from 2011 on, will be the toughest for decades warned Mr Darling.
Public pay settlements will be held at a maximum of 1% for the two years from 2011.
The number of civil servants in London is to be reduced by one-third over the long term, with 15,000 posts relocated within the next five years.
One thousand posts from the Ministry of Justice will be moved out of central London, saving £41 million.
From October next year, the most expensive properties will be excluded from the Housing Benefit calculation in each area, which will - added to anti-fraud measures - save £250 million a year.
The Government is making considerable progress on securing £16 billion through asset sales.
Over the next year, RBS and Lloyds will provide a total of £94 billion of new business loans, nearly half to smaller firms. A new Credit Adjudicator will fast-track complaints from smaller firms who say they have been unfairly denied credit.
The Financial Services Authority is to improve and speed up the licensing process for new banks to boost competition, said the Chancellor.
A new national investment corporation, to be called UK Finance For Growth, will streamline and improve Government help to small and medium-sized enterprises overseeing £4 billion of support for business.
A new Growth Capital Fund will provide fast-growing companies with private capital and will eventually provide £500 million of finance - with commercial banks so far agreeing to contribute more than £100 million.
An extra 15% of central Government contracts will go to SMEs, which could mean up to £15 billion of new business across the whole of the public sector.