The British economy grew twice as fast as expected in the third quarter, defying expectations of a sharp slowdown.
GDP expanded 0.8 per cent, well above the 0.4 per cent predicted by economists, as the prospects of a double dip recession receded.
The latest figures improve the chances that Britain will be able to withstand the effects of the Government's austerity package and will reduce the likelihood of the Bank of England pumping more cash into the economy in the coming months.
Just a week ago, George Osborne announced cuts of £81 billion aimed at reducing the deficit and restoring credibility to the country’s finances.
Following the rash of gloomy predictions that followed his announcement, the Chancellor is likely to be pleasantly surprised by the figures, which are the first to reflect the period of the new Coalition Government.
At Cabinet Mr Osborne took colleagues through the growth figures.
The Prime Minister's spokesman said the Chancellor told Cabinet the global situation remains "relatively choppy but these figures this morning we can take some comfort from. "
The pound strengthened sharply against the dollar after the Office for National Statistics published the figures, up 1.1 cents to $1.5843 and yields on benchmark 10-year gilts rose above 3pc. Equity markets were largely unmoved with the FTSE 100 trading down 40 points at 5711.
Graeme Leach, Chief Economist at the Institute of Directors said: "The GDP numbers are better than expected given the recent spate of indicators suggesting a much weaker performance. The key question is will it last and that's where the IoD is more cautious."
Yesterday, David Cameron told business leaders that he was now fully committed to pursuing a growth strategy and he urged the private sector to redouble its efforts to boost the economy.
Nevertheless today's data does represent a slowdown from the April to June period. In that quarter the country emerged from recession strongly with growth of 1.2 per cent.
However, the resilience of the data is likely to be enough to persuade policy-makers not to embark on another round of Quantitative Easing before the end of the year.
Peter Dixon, an economist at Commerzbank, said: "This probably postpones the debate on any extension of QE for a few months yet."
Economic growth over the past six months has now hit 2 per cent, which is the fastest pace of expansion seen over two consecutive quarters for 10 years.
Cabinet ministers meeting in Downing Street will be relieved that the growth figures were not worse.
The ONS said, allowing for a bounce back in the second quarter following the bad weather at the start of the year, the underlying growth between July and September was actually similar to that of the second quarter.
Year-on-year growth has recovered to levels seen before the recession, reaching 2.8 per cent in the third quarter - the highest annual rate of expansion since 2007.
While the figures are only a preliminary estimate and may be subject to change, the initial growth figures are likely to give a boost to the Coalition and a blow to Labour.
Ed Miliband, the Labour leader, yesterday accused the Government of taking a "big gamble with growth" by pushing through deep public spending cuts, but a stronger recovery in the private sector should give Britain a better chance of withstanding austerity measures.
The ONS data revealed a surge in construction output helped drive growth in GDP, growing by 4 per cent during the third quarter and contributing 0.2 per cent of the overall 0.8 per cent expansion.
Output in the key services sector - accounting for three quarters of the economy - was 0.6 per cent, while industrial production also grew by 0.6 per cent.
Critics doubt the private sector has the capacity Mr Cameron believes it does to take up the slack in the economy.