The government will also pay firms a £1,000 bonus for every staff member kept on for three months when the furlough scheme ends in October.

And Mr Sunak announced a scheme to give 50% off to people dining out in August.

The chancellor warned "hardship lies ahead", but vowed no-one will be left "without hope", in a statement to MPs.

He rejected calls to extend the furlough scheme beyond October, saying it would give people "false hope" that they will have a job to return to.

But he said he would "never accept unemployment as an inevitable outcome" of the pandemic.

Details of how the package will be paid for - through borrowing and possible tax rises - are likely to be unveiled in the chancellor's Autumn Budget.

'Decent work'

The "job retention bonus" could cost as much as £9.4bn if every furloughed worker is brought back.

Explaining how it will work, the chancellor said: "If you're an employer and you bring back someone who was furloughed - and continuously employ them through to January - we'll pay you a £1,000 bonus per employee.

"It's vital people aren't just returning for the sake of it - they need to be doing decent work.

"So for businesses to get the bonus, the employee must be paid at least £520 on average, in each month from November to the end of January - the equivalent of the lower earnings limit in National Insurance."

He told MPs he will cut VAT on food, accommodation and attractions from 20% to 5% from next Wednesday.

This cut will apply to eat-in or hot takeaway food and non-alcoholic drinks from restaurants, cafes and pubs, accommodation in hotels, B&Bs, campsites and caravan sites, and attractions like cinemas, theme parks and zoos.

Rishi Sunak said this "£4bn catalyst" would help protect "over 2.4 million jobs".

Mr Sunak also announced an "Eat Out to Help Out" discount, which he said would help protect 1.8 million jobs, at cost of £0.5bn.

Meals eaten at any participating business, Monday to Wednesday, will be 50% off in August, up to a maximum discount of £10 per head for everyone, including children.

Businesses will need to register, and can do so through a website, which will open next Monday.

Kate Nichols, chief executive of UK Hospitality, which represents bars, restaurants and visitor attractions, tweeted: "Thank you to Rishi Sunak (for) recognising the importance of tourism and hospitality and the benefit it brings to economy - this will make a material difference for the sector as we face a long road to recovery."