Time and again, the Tory leader has used his promise to strengthen marriage so as to reassure people that he was fully committed to defending this core value of conservatism. Now, however, it is becoming all too plain that he is signing up instead to the wilder extremes of political correctness. Indeed, he is planning to go further than even New Labour dared to tread. Eat your heart out Harriet Harman, patron saint of equality!

For it was revealed yesterday that ministers are planning to change the law to allow homosexual couples to 'marry' in religious ceremonies, including in church. Gay partnership ceremonies in other venues will also be allowed for the first time to contain a religious element, such as hymns or readings from the Bible. These unions will then be called 'marriage'. For sure, this change doesn't force religious institutions to introduce such ceremonies; whether they do so is up to them.

But the Government's position is anything but neutral. For it implicitly endorses the idea that there is nothing wrong with overturning centuries of Biblical understanding of the sacrament of marriage as the union of a man and a woman. As such, the Government will be cutting the ground from under the feet of religious traditionalists.

And what if churches refuse to conduct such a travesty of a marriage ceremony? Presumably, they would then risk being sued for 'discrimination'.

Truly, we are fast reaching the stage where upholding Biblical sexual standards will become the morality that dare not speak its name. Once again, we have to wonder at the way in which a politically motivated faction within a tiny minority of the population - for many gay people do not approve of this ideological gay rights agenda - is now running public policy.

The truth is that marriage is a unique institution because it involves the process by which humanity reproduces itself - which is only through the union of male and female.

In the knowledge his downfall was imminent, Mr Mubarak is understood to have attempted to place his assets out of reach of potential investigators. On Friday night Swiss authorities announced they were freezing any assets Mubarak and his family may hold in the country's banks while pressure was growing for the UK to do the same. Mr Mubarak has strong connections to London and it is thought many millions of pounds are stashed in the UK.

But a senior Western intelligence source claimed that Mubarak had begun moving his fortune in recent weeks. "We're aware of some urgent conversations within the Mubarak family about how to save these assets," said the source, "And we think their financial advisers have moved some of the money around. If he had real money in Zurich, it may be gone by now."

The revelation came as the ruling military council, which took power as Mr Mubarak stepped down on Friday, confirmed its pledge eventually to hand power to an elected civilian government, although it did not set a date. It also reassured allies that Egypt will abide by its peace treaty with Israel, as it outlined the first cautious steps in a promised transition to elections and "to build a democratic free nation".

Economists expect the Office for National Statistics to reveal that inflation rose to 4.2 per cent in January - more than double the Bank's 2 per cent target - due to higher food and petrol prices as well as last month's rise in VAT from 17.5 per cent to 20 per cent. It will be Mervyn King's 10th letter since April 2007.

Soaring prices were squeezing households, Mr King recently conceded. Take home pay was expected to end the year worth the same as in 2005, he said last month, the steepest fall in living standards in 80 years. Traders are now warning that inflation is threatening to damage Britain's growth prospects as well.

The price of Government debt has risen in the past six months, which in turn pushes up the cost of credit to households and businesses and lifts the interest bill on the 2.3 trillion pounds of public debt. The Bank is also expected to lower its growth forecasts for this year, from 2.6 to about 2 per cent, when it publishes its quarterly Inflation Report on Wednesday.

For Israel, Mubarak's departure has left behind an all-consuming worry that the influence of Islamic extremists will grow, and the two countries' historic 1979 peace treaty could be in jeopardy. For the Western-backed Palestinian leadership, the fall of Egypt's strongman deprives them of a key mediator with the Israelis and - just as crucially - with their Palestinian rivals in the militant Islamic Hamas movement. Both sides are now waiting to see what kind of Egyptian government emerges in Mubarak's wake. It's one more distraction preventing Israelis and Palestinians from reviving a US-backed peace push that ground to a halt only weeks after it started last year.

The Palestinians were already reeling from last month's leaks to Al-Jazeera TV disclosing that they had offered deep concessions to Israel in past peace talks. The revelations triggered public outrage. Hoping to diffuse the anger on the street, the Palestinians are now focused on moving ahead with long-delayed elections. "When it comes to the Palestinian people, this is a test for the Americans," said Hanan Ashrawi, a member of the top Palestinian decision-making body, the Palestine Liberation Organization's executive committee. "They must understand it's a critical issue."

She said that just as President Barack Obama ultimately sided with the Egyptian protesters who brought down Mubarak, he should change what is viewed by the Palestinians as an unfair pro-Israel bias.

He was giving his first major speech since a popular uprising in neighbouring Egypt forced President Hosni Mubarak to resign, an event which electrified the Arab world and prompted speculation that other Arab governments could also be toppled. "Fleets of boats should take Palestinians... and wait by the Palestinian shores until the problem is resolved," Gaddafi was shown saying on state television. "This is a time of popular revolutions."

"We need to create a problem for the world. This is not a declaration of war. This is a call for peace," he said in a speech given to mark the birthday of the Prophet Mohamed, a holy day in the Islamic calendar. He also said: "All Arab states which have relations with Israel are cowardly regimes." Palestinians have long demanded that refugees who fled or were forced to leave in the war of Israel's creation in 1948 should be allowed to return, along with their descendants.

Gaddafi also issued a call to Muslim countries to join forces against Western powers. He said the world was divided into white, denoting the United States, Europe and their allies, and green for the Muslim world. "The white colour has decided to get rid of the green colour," Gaddafi said. "These countries should be united against the white colour because all of these white countries are the enemies of Islam."

At its current rate of growth, analysts see China replacing the US as the world's top economy in about a decade. "It's realistic to say that within 10 years China will be roughly the same size as the US economy," said Tom Miller of GK Dragonomics, a Beijing-based economic consultancy. Japan played down the significance of the shift in the economic league table, and the fact that it has been replaced as the second-largest economy for the first time in more than four decades.

"As an economy, we are not competing for rankings but working to improve citizens' lives," said Economics Minister Kaoru Yosano. The minister added that China's booming economy was welcome news for Japan as a neighbouring country. China is now Japan's main trading partner and is increasingly important to companies such as electronics firm Sony and carmakers like Honda and Toyota. However Mr Yosano said that Japan needed to closely watch "risks from overseas economies and currency moves".

Most economists agree that while China as a whole is growing, and the average person is getting wealthier, comparing only the size of its economy to Japan's does not paint an accurate enough picture. "GDP per head in China is about $4,500, but in Japan it's about $40,000 per head," said Mr Miller of GK Dragonomics. "Most people in China are still poor, more people live in the countryside than in cities. The average Japanese person is much much richer than the average Chinese person."

The move comes after the fall of Hosni Mubarak in popular protests in Egypt, an important neighbour. The cabinet shake-up has long been demanded by Mr Fayyad and others in the Fatah faction, according to Reuters news agency. One political source told Reuters that it would result in a "massive change" in the composition of the government. Mr Fayyad, 58, will be asked to stay on in the post he has occupied since 2007.

An aide to Mr Abbas on Saturday said the PA planned to hold long-overdue elections before September. "The executive committee has decided to start preparations for presidential and parliamentary elections in the coming months... no later than September," the PLO's Yasser Abed Rabbo told journalists. The BBC's West Bank correspondent Jon Donnison says the election pledge seems intended to show that Palestinian leaders are responding to events in Egypt and Tunisia.

However, Hamas, who are in control of the Gaza Strip, immediately rejected the plan, saying Mr Abbas had no legitimacy. "Hamas will not take part in this election. We will not give it legitimacy. And we will not recognise the results," spokesman Fawzi Barhoum said. Hamas says the vote is intended to divert attention from the scandal caused by documents leaked by Al-Jazeera TV, which showed major concessions were offered to Israel during peace talks in 2008.

The Supreme Council of the Armed Forces can issue new laws during the transition period, according to the statement on state television. The government is now reporting to the military high command in the same way it reported to Mubarak before he stepped down, the prime minister confirmed shortly before the military statement was read.

The restoration of security and normal life is the government's priority, Prime Minister Ahmed Shafiq said, as troops began trying to clear protesters from Tahrir Sqaure, the spiritual heart of the 18-day uprising that toppled Mubarak after 30 years. That could take time, Shafiq acknowledged in his first comments to the press since Mubarak stepped down.

"The feeling of the lack of security which started when the situation began has to end," he said. "It will end gradually, but not as fast as we want." He also said he was reviewing candidates to fill vacant government ministries, adding that no one who was not acceptable to the public would be appointed. His remarks were carried live on state television.

On Wednesday, the Bank publishes its quarterly inflation report. The document is the Bank's snapshot on the economy, where it is now and - crucially - where it is going. The centrepiece of the report is its inflation forecast, upon which its interest rate decisions are based. If inflation is projected to remain above 2 per cent, rates will have to rise. If it is expected to fall below 2 per cent, rates may fall - or in the new world of hyper-low interest rates, trigger more quantitative easing beyond the existing 200 billion pounds.

For the past three years the Bank has got inflation consistently wrong. Just last year, it predicted the current quarter's inflation figure would be 1 per cent. When the ONS publishes a figure four times that level on Tuesday, it will only aggravate concerns. The Governor and his cohorts have a formula for dealing with overshoots now. The Bank needs to "look through" inflation, King says. Shear off the one-off events, oil price spikes, poor harvests that lead to food price rises, the inflationary effect of the pound's devaluation and the VAT rise. Strip all that out and domestically generated inflation in the past four years has been "close to zero and obviously well below the target", King said in Newcastle last month.

The argument is wearing thin. DeAnne Julius, a former MPC member, said last week that the inflation forecast has become less credible. She even went so far as to state that current members of the MPC have doubts about whether the Bank's forecasting model is the best way of predicting the economy. "I think there is a credibility problem," she said. "We could well see that our high inflation gets embedded into parts of the wage-bargaining system. The difficulty is that wage bargainers and others will look at the actual inflation rate as they're beginning to try to increase wages."

If the market loses faith in the Bank's ability to contain inflation, market rates of interest will start moving independently of the Bank base rate - pushing up the cost of credit to businesses and households. It may already be happening. The Bank's unenviable task in its inflation report on Wednesday is to explain why one course of action is better than the other and, more crucially, convince doubters that the Bank's crystal ball is clearer than theirs.

In a political "win" for Nick Clegg and his party, the Coalition will also say that such ceremonies should for the first time be allowed to have a religious element, such as hymn-singing and readings from the Bible. They could, it is understood, also be carried out in the future out by priests or other religious figures. The landmark move will please equality campaigners but is likely to prompt a fierce backlash from mainstream Christian leaders, as well as some Right-leaning Tories.

The Church of England has already pledged not to allow any of its buildings to be used for civil partnership ceremonies, while last year Pope Benedict said same-sex marriage was among the "most insidious and dangerous challenges that today confront the common good." Some faiths, however - including the Quakers, Unitarians and Liberal Jews - support the change in the law and will apply for their buildings to host same-sex "marriage" ceremonies.

Currently civil partnership ceremonies, which were introduced in 2005, have to be entirely secular and cannot contain any religious element, even though civil partners have almost exactly the same legal rights as married spouses.

Hundreds of thousands of demonstrators cheered Friday evening's announcement from Tahrir Square, the epicenter of Egypt's pro-democracy movement in the heart of Cairo's city center. After Mubarak's Thursday evening speech, in which he said he would stay in office until September, many had almost lost faith that they could push through their central demand. Mubarak, they have said since the very beginning, must go.

For 30 years, Mubarak's partners in the West have stood by as he ruled Egypt with an iron fist. Called "the smiling cow" prior to his ascent to power - a nickname earned for the grin he often wore as he stood behind former Egyptian President Anwar al-Sadat - Mubarak quickly became a powerful leader after his predecessor was assassinated in October 1981. He became a reliable partner to the West - and ruled his own country with force.

His portrait hung in every official office in the country; he was dutifully praised in every speech. Young Egyptians, well over half of the population, have never known a leader other than Mubarak. Indeed, for them, he came to embody all that was wrong with the country: few economic opportunities, little freedom and no right to voice criticism.

But Mubarak was valuable to the West. He never wavered in upholding his peace deal with Israel and played an outsized role in the Middle East. His far-reaching influence in the Arab world also made him indispensable. US presidents, French heads of state, British prime ministers - all maintained close relationships with the Egyptian president. He was a welcome guest in Germany too and met with almost all of Berlin's top politicians. Indeed, Germany had even been mentioned as a possible place of exile for Mubarak, before he put such speculation to rest.

Nevertheless, many have never forgiven Mubarak for declaring peace between Israel and the Arabs as "his mission." All across the Arab world, some still continued to disparage Mubarak as a "Zionist" or "lackey of the West" right up to his resignation. Pious Muslims also considered him to be their enemy because of the repression of the Muslim Brotherhood in Egypt.

It remains to be seen what the transfer of power will mean.

At the top of the list may be AMR MOUSSA, former Egyptian foreign minister. The long-time diplomat has a large popular following in Egypt because of his habit of publicly criticizing policies of the US and Israel, in marked contrast to Mubarak's quiescence.

But there's also wildcard MOHAMED ELBARADEI, the nobel laureate and former head of the International Atomic Energy Agency, who captivated Egyptian and foreign media with his return to Egypt early last year to mount a fresh challenge Mubarak's dictatorship and abuses. Many Egyptians still say they don't trust a man who spent much of his career abroad to make the call. "ElBaradei has lost credibility," says opposition politician Hamdeen Sabahi. "He is not really connected to the country and its people."

AYMAN NOUR, who ran against Mubarak in 2005 in the first multi-candidate presidential race and was subsequently jailed by the regime, slandered by state media, and stripped of his license to practice law - is a safer choice than the one they don't know. "The difference between Ayman Nour and ElBaradei is that one is a real Egyptian and the other is more of a khawaga [foreigner]," says Abdel Hamid Osman, a demonstrator.

YAHYA AL-JAMAL, a retired head of the constitutional court may be too old some say, but others want him to lead the way to constitutional reform. "He's the spokesman for the revolution," cried one bystander excitedly, as Jamal moved through the crowd in Tahrir last week. Other prominent judges, MAHMOUED AL-KHUDAIRY and ZAKARIA ABDEL AZIZ, have also attracted attention for their time spent in the square. And another popular nobel laureate, the chemist AHMED ZUWEIL has also returned to his home country to join the cause.

"We have the traditional names," says Rashwan. "But perhaps we will have dozens of new people running. The process of destroying the old regime is already finished." Now, it's time for phase two, he adds: "Building a new regime. AND I'M NOT EXCLUDING THE CHANCE OF DARK HORSES APPEARING SUDDENLY."

Estimates of the size of the crowd, which started filling Algiers' central May 1st Square, also called Concord Square, in the morning, varied. Organizers said as many as 30,000 showed up. Thousands of state security officials and police had fanned out across the capital ahead of the protests, called by a coalition of opposition leaders, trade unionists and human-rights activists.

Hacene Mezoued, a top official with the Rally for Culture and Democracy, the main political party spearheading the protests, said 1,000 protesters, including 100 women, had been arrested. He said there had been some skirmishes with the police as the security services attempted to disperse protesters, including by firing tear gas.

The Associated Press estimated the crowd at about 10,000. Protesters shouted "Power Out," and "$155 Billion, and We're Still Poor," a reference to the oil producer's estimated foreign-exchange reserves. Algerian protests first flared last month, inspired in part by the demonstrations taking place in next-door Tunisia. But in Algeria, anger over a sudden increase in food prices - enacted by the government as part of what it had billed as economic reforms - was also a big trigger.

Since then, Algeria worked to reverse those hikes. In subsequent weeks, as revolts in Tunisia and Egypt inspired other Arab protesters to demand political reform, Algerian opposition leaders have made similar demands. Last week, Algerian authorities vowed to lift a state of emergency that's been in place since 1992, one demand of political reformers. Most opposition leaders have said they aren't seeking the immediate overthrow of longtime President Abdelaziz Bouteflika.

The United States is in a delicate position because it advocates democratic reform, but wants stability in Yemen because it is seen as a key ally in its fight against Islamic militants. Hundreds of protesters had tried to reach the Egyptian embassy in Sanaa, Yemen's capital on Saturday, but security forces pushed them back. Buses ferried ruling party members, equipped with tents, food and water, to the city's main square to help prevent attempts by protesters to gather there.

There were about 5,000 security agents and government supporters in the Sanaa square named Tahrir, or Liberation. Egypt's protesters built an encampment at a square of the same name in Cairo, and it became a rallying point for their movement. Witnesses say police, including plainclothes agents, drove several thousand protesters away from Sanaa's main square on Friday night. The demonstrators tore up pictures of President Ali Abdullah Saleh and shouted slogans demanding his immediate resignation.

Saleh has been in power for three decades and tried to blunt unrest by promising not to run again. His term ends in 2013. Yemen is the Arab world's most impoverished nation and has become a haven for al-Qaida militants. Saleh's government is riddled with corruption and has little control outside the capital. Its main source of income - oil - could run dry in a decade.

"He had very tough things to say about the United States," said Ben-Eliezer, a member of the Labor Party who has held talks with Mubarak on numerous occasions while serving in various Israeli coalition governments. "He gave me a lesson in democracy and said: 'We see the democracy the United States spearheaded in Iran and with Hamas, in Gaza, and that's the fate of the Middle East,'" Ben-Eliezer said. "'They may be talking about democracy but they don't know what they're talking about and the result will be extremism and radical Islam,'" he quoted Mubarak as saying.

US support for pro-democracy elements in Iran has not led to regime change in the Islamic Republic, and Hamas, a group Washington considers to be a terrorist organization, won a 2006 Palestinian election promoted by the United States. Hamas seized control of the Gaza Strip in 2007 after a coalition government it formed with Western-backed Palestinian President Mahmoud Abbas collapsed in a power struggle. Ben-Eliezer said Mubarak expanded in the telephone call on "what he expects will happen in the Middle East after his fall".

"He contended the snowball (of civil unrest) won't stop in Egypt and it wouldn't skip any Arab country in the Middle East and in the Gulf. He said 'I won't be surprised if in the future you see more extremism and radical Islam and more disturbances - dramatic changes and upheavals,'" Ben-Eliezer added.