Liberal Democrats stepped up the fight against union leaders opposed to spending cuts and redundancies by accusing them of “doing the wrong thing for the country”.

Union leaders have threatened “war” against Birmingham City Council after it told almost 26,000 staff they could lose their jobs under plans to slash spending.

Stephen Hughes, the authority’s chief executive, sent legal notices to employees from street sweepers to clerks, carers, and cleaners warning them that they will receive new contracts imposing cuts in pay and conditions. Only those working in schools were exempt.

The measure, designed to save £330 million by 2014, caused outrage at last week’s TUC conference in Manchester, where delegates backed an emergency motion condemning the move.

Joe Morgan, the West Midlands Regional Organiser for the GMB union, said: “You want a war pal, you’ve picked on the wrong union and we’re going to take you on and you will not win.”

But Danny Alexander, the Chief Secretary to the Treasury, condemned the unions as he spoke to the Lib Dem conference in Liverpool.

As second-in-command in the Treasury, Mr Alexander is working closely with George Osborne, the Conservative chancellor, on public spending cuts which will be revealed in full in the comprehensive spending review on October 20.

He said: “There will be tough decisions. But I can guarantee that fairness, our Liberal Democrat belief in fairness will be in my mind every step of the way.”

Mr Alexander added: “For local authorities there will be less money, yes; but a lot more freedom. More freedom too, for those who work in the public sector.”

But he warned: “I know there are a minority in the trade unions who will deliberately misrepresent what this government stands for because they are spoiling for a fight.

“Please don’t allow their political motivations to push you into doing the wrong thing for the country. We do not want to take you on. We want to take you with us.”

Mr Alexander also announced plans to crack down on tax avoidance, which he said would raise £900 million a year.

Unions organised demonstrations in Liverpool against the planned cuts, backed by Labour MPs.

Birmingham MP Liam Byrne (Lab Hodge Hill), the Shadow Chief Secretary to the Treasury, said: “I welcome any and every crackdown on tax dodgers. But it’s clear the Lib Dems have become the Tories useful idiots; offering nothing more than a cover-up for a Tory Budget that hits the poorest hardest and an economic strategy that puts people’s jobs in Birmingham at risk.

“I’m afraid decent people across the city will see straight through them.”