Chief Secretary to the Treasury Danny Alexander is delivering his "alternative Budget" to the House of Commons.
Mr Alexander said he was unveiling an option that will not return the country to the era of "Kathy Come Home".
Mr Alexander used an unprecedented alternative fiscal statement, using assessment from the Office for Budget Responsibility, to say deficit reduction needed to happen more fairly than proposed by the Chancellor.
He struggled to make himself heard over Labour MPs shouting that he was using "ministerial privileges" for "purely party political purposes".
Amid heated scenes, Mr Alexander ended up accusing one Labour MP of "ranting like a lunatic".
He went on to announce measures to crack down on tax evaders that had been left over from the Budget from him to officially unveil in the House of Commons.
The plans will see banks and accountants who help people dodge tax facing fines equal to the amount owed.
Speaking ahead of his statement, Mr Alexander told Sky News the Government wanted to send the message that "dodging and evading tax is simply unacceptable".
Under the measures firms that assist people or other firms to evade tax by "hiding" their money will be fined precisely the amount they helped people to evade.
It means the Government would get the money back from both the person who evaded the tax, and the firm that helped them to do so.
He said: "In future if a bank or an accountancy firm help you evade tax they will be liable for a financial penalty the same as the tax that they encourage you to evade.
"This is all part of the Liberal Democrat-led clampdown on avoidance and evasion that has gone on for the whole of the parliament."
He added: "We need to send a strong message that dodging and evading tax is simply unacceptable."
Labour MP Chris Leslie accused Mr Alexander of orchestrating a "phoney exercise" to put forward a Liberal Democrat agenda.
Mr Leslie accused Mr Alexander of using a legitimate Government Budget statement on tax evasion measures to present Liberal Democrat plans and said he was guilty of making "false pretences".
He said the Liberal Democrats had backed the Tories for five years and now Mr Alexander must pay the "ultimate price".
The Lib Dem leader, Nick Clegg, said £6bn of the £27bn needed to balance the books should be found from an increase in tax - mainly for the richest in society.
Speaking on his LBC radio show Call Clegg, he said: "Over the last five years, we have basically taken a mixture of tax increases and spending reductions, welfare reductions, action on tax avoidance, to start balancing the books. That's allowed us to halve the deficit as a proportion of our nation's wealth.
"The Conservatives announced last autumn that they are going to lurch away from that and only nobble the working-age poor and only the working-age poor will make additional sacrifices to balance the books.
"I don't think that's fair, I don't think it's right to ask for £1,500 off the eight million poorest families in this country, which is what the Conservatives want to do."
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