Shadow chancellor Ed Balls has urged George Osborne to make a swift economic "U-turn", after growth forecasts for 2013 were halved to 0.6% in the Budget.
Mr Balls said government policies had "sucked confidence" out of the economy and the plan was not working.
During the two men's tour of media outlets after the Budget, Mr Osborne defended his economic package.
He insisted his strategy was working, saying "we have to go on confronting these problems" and cutting debt.
Those measures included freezing petrol duty rises, a cut in corporation tax to 20% in 2015, cancelling future automatic beer duty rises and measures to boost the housing market.
Mr Osborne defended the government's plan to effectively guarantee £130bn worth of new mortgages as a "big new step" that was needed because the mortgage market was "not functioning properly".
Pressed on whether the scheme would be restricted to first-time buyers or may be open to people who wanted to buy second homes, the chancellor said the government would consult with lenders about the details.
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End QuoteCity experts were predicting borrowing would rise a lot more than this. How did the chancellor avoid this fate?"
"The mortgage market is an extremely complex thing," he told BBC Radio 4's Today Programme. "The intention of the scheme is absolutely clear - it is for people who want to get their first home or have a home and want to move to a bigger home because perhaps they have got a bigger family.
"We are working with the industry to get a scheme that works."
The Bank of England would be able "to turn off the tap" on new mortgage finance after three years if the market was over-heating, he added, insisting that this was an important element of the plan's "fiscal credibility".
Growth forecasts for 2013 have been halved to 0.6% while figures from the Office for Budget Responsibility suggest the government's efforts to cut the deficit - the difference between money spent and earned in a year - have stalled and it will remain stuck at about £120bn for three years.
'Borrowing for failure'Ahead of a Budget debate in the Commons later, Mr Balls told the BBC that while there were some "good things" in the Budget, it had shown "in even more vivid detail than before... that the plan's not working. The economy is not growing".
He added: "If you're a chancellor, if you made a mistake, do your U-turn quickly.
"The longer you wait, the worse it gets, and the harder it becomes politically, even if economically it's the right thing."
He accused the chancellor of having a "self-denying ordinance" which restricted him from doing anything other than "tinkering at the edges".
"They are borrowing for failure when they could have borrowed to get the economy moving and actually get the deficit down," he added.
Mr Osborne said the public understood progress was being made on the public finances and job creation, despite the difficult economic conditions.
But he added: "We have not made as much progress as anyone, including myself, would have liked because the environment we are operating in has got much more difficult."
Using an analogy of scaling a mountain, he said: "We can see where we need to get to but the weather has got worse."
Business Secretary Vince Cable admitted on Wednesday the economy was "flat lining" and refused to predict when the "age of austerity" might end - although he thought it "unlikely" to last until 2020.
It all meant Mr Osborne had little room for manoeuvre when it came to tax giveaways, but he found some extra cash by squeezing public spending further and other measures.
This allowed him to bring forward the introduction of a £10,000 income tax threshold by a year, to 2014, in a move that pleased the Lib Dems, who had campaigned on the issue at the last election.
'Miserable Budget'The chancellor ignored pre-Budget calls by Mr Cable and others to borrow more to boost growth with a big building programme.
But he did announce £2.5bn of spending on infrastructure paid for by a fresh public spending squeeze. Details of where the axe will fall will be announced in June when the government unveils its spending review.
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Meanwhile, after the Evening Standard tweeted details of the Budget before Mr Osborne had delivered it, the chancellor has asked his top official to conduct a review of the practice of releasing Budget information in advance of the speech.
The Scottish National Party described Mr Osborne's statement as a "miserable Budget" which "just continues along the austerity path that is clearly failing". Plaid Cymru said the £2.5bn in infrastructure spending was just a "fraction" of what was actually needed.
Green Party MP Caroline Lucas said it was "yet another Budget that treats the public with contempt, continuing to peddle the myth that our national debt and deficit increased due to excessive public spending rather than bank bailouts".
UKIP leader Nigel Farage dismissed Mr Osborne's statement as a "Budget for headline writers" that failed to tackle "the serious problems in our economy".
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