The German Defence Minister, Mr Rudolf Scharping, threatened to quit this week, just days after the government was plunged into crisis by the resignation of Mr Oskar Lafontaine as Finance Minister, according to German media reports yesterday.
Mr Scharping has been involved in a heated dispute with cabinet colleagues over a proposal to cut his department's budget and about how a military intervention in Kosovo should be financed.
The Defence Ministry dismissed the report of a resignation threat, which was carried in a number of newspapers, as speculation. But the government admitted that leaders of the Social Democrats and the Greens held an emergency meeting on Thursday night to discuss the defence budget.
Mr Scharping hoped to become the parliamentary leader of the SPD following last year's election and agreed to become Defence Minister only on condition that his budget would not be cut. He is widely tipped to succeed Mr Javier Solana as NATO Secretary-General.
Despite his reported resignation threat, Mr Scharping's DM47 billion (£19 billion) budget will be cut by DM235 million and the Defence Ministry will have to share with the Finance Ministry the cost of sending troops to Kosovo.
The German parliament yesterday passed a controversial tax reform proposed by Mr Lafontaine before his resignation last week. The plan, which was sharply criticised by industry, introduces an energy tax and reduces the tax burden on families and small firms by more than DM20 billion.
But employers will have to pay social security payments for parttime workers and a number of lucrative tax loopholes have been plugged.
Big companies, such as the Allianz insurance firm, threatened to move out of Germany if the government went ahead with the tax reform. But the Economics Minister, Mr Werner Muller, warned companies against making such threats and told them that business could not reverse the democratic decision the German people made last September.
There were heated exchanges in the Bundestag yesterday morning as deputies passed a new citizenship law that will enable Germany's seven million foreign residents to become citizens more easily.
Under the new law, which was passed with the support of the opposition Liberal Free Democrats (FDP), German-born children of foreign parents will be allowed to hold two passports until the age of 23. They must then choose between German citizenship and that of their parents' country of origin.
German police trained to combat Internet crime said yesterday they had cracked an international online child pornography ring after launching co-ordinated raids on homes in seven countries.
