Plans to merge police forces and create a West Midlands super-force have been thrown into disarray by the Treasury's refusal to foot the bill.

The Home Office denied claims it was giving up on the scheme but the mergers have now been delayed indefinitely.

Last night the Government was under fire from former Home Secretary Charles Clarke, who said the decision put the public at risk from terrorism.

Mr Clarke drew up plans to slash the number of police forces from 43 to 24, before he was sacked in May.

The proposals involve merging West Midlands Police, West Mercia Police, Staffordshire Police and Warwickshire Police to create one regional force serving five million people.

But West Mercia is staunchly opposed to the proposal.

Yesterday, the Home Office admitted it had been forced to delay a merger even in the one part of the country where there was agreement between the forces involved.

The Government halted a merger between Lancashire and Cumbria because it has failed to solve the problem of the police precept, which is added to council tax bills to help pay for policing.

In the West Midlands Police area the police precept is £87.55 for a band D home, but in Staffordshire it is £152.53.

If the mergers went ahead, the precept would need to be the same across the entire region - which means West Midlands residents can expect a massive increase, unless the Treasury steps in.

The Home Office had hoped the Chancellor Gordon Brown would agree to subsidise the mergers so the tax rise was staggered. But it emerged yesterday he has refused.

A Home Office spokesman said: "We have, so far, not found a workable financial package to the issue of local government precept for police forces. However, we remain actively engaged with government colleagues to find a solution.

"The Home Secretary remains convinced of the need to review and reform our structures so as to better equip the police service to deal with the challenges we face in the 21 Century."

It followed a report by official inspectors last September which warned that smaller forces lacked the resources to fight sophisticated modern crime.

Mr Clarke said: "It will seriously hamper the ability of the police to contest terrorism and serious crimes like trafficking in drugs and people, as the 2005 Report of Her Majesty's Inspectorate made clear."

Shadow Home Secretary David Davis said: "It is clear that the Government has woken up to the folly of its own proposals to regionalise our police forces."