Business secretary Peter Mandelson and Chancellor Alistair Darling have advised ministers to delay new legislation that would add to the burden on small businesses struggling under difficult trading conditions.

A confidential memo asked ministers for "a moratorium on legislation that will entail additional costs for businesses".

Laws that could be delayed include allowing councils to ban alcohol promotions.

A Department for Business spokesman said: "It is right that in the current downturn we look closely at the cost on business."