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Aides stressed that the money was intended to allow the UK to 'get ready for all scenarios - deal or no deal'.
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Brexiteers reacted with alarm to forecasts in the budget suggesting Britain would still be paying £3.5billion a year to the EU by 2023 - but the Treasury insisted it was only an 'academic' forecast until the Brexit deal was complete.
Cabinet Brexiteers Boris Johnson and Michael Gove are understood to have been among colleagues frustrated by his gloomy attitude.
Mr Hammond said he had previously set aside £26billion as a Brexit warchest, adding: 'Now I choose to use some of the headroom I established then so that as well as reducing debt, we can also invest in Britain's future, support our key public services, keep taxes low, and provide a little help to families and businesses under pressure.
'A balanced approach, that will prepare Britain for the future, not seek to hide from it.' The Chancellor effectively ended austerity in the Budget with a net cost to the public purse of £25billion.
The Office of Budget Responsibility predicts net migration – the number of new arrivals minus those who leave – will fall to 165,000 by 2023.