Labour challenged the SNP to dump its flagship policy of independence after the Nationalists' reversal on a local income tax.

The challenge came from Iain Gray, the Labour leader in Holyrood, who claimed Alex Salmond's credibility was "shot to pieces" by the decision to drop the tax policy. He also challenged Mr Salmond to apologise to voters.

At First Minister's Questions, Mr Gray brandished a copy of the SNP's 2007 election manifesto which he then ripped  - and challenged Mr Salmond: "Let's finish the job of tearing up this manifesto."

Programme Note: John Swinney, the Finance Secretary, is on the hot seat tonight on Politics Now, 10.35pm on stv

Mr Salmond replied with an attack on the Labour and Tory "council tax cabal". He mocked Mr Gray by quoting criticism by Labour's First Minister in Wales, Rhodri Morgan, of Westminster-driven spending cuts.

"If Rhodri Morgan can speak for Wales, why isn't Iain Gray allowed to speak for Scotland?" he demanded.

Thursday's clashes began with Mr Gray raising the income tax policy U-turn, saying Mr Salmond had been "caught red-handed selling short Scotland's voters - the First Minister's own definition of a spiv and a speculator."

"This week, even the bankers had to say sorry," he said. "Will the First Minister say sorry to Scotland's voters for the way he conned them?"

Mr Salmond told him: "I think apologies are required from the council tax cabal of Labour and the Tories, who have been voting to uphold the council tax in Scotland - a Valentine's Day love-in between Labour and the Conservative parties."

There should also be apologies from those at Westminster planning £500million worth of cuts in Scottish public services, he went on.

The First Minister quoted Mr Morgan as saying of proposed cuts: "This is the wrong time to be cutting public spending," and posed the challenge to Mr Gray.

The Labour leader retorted: "Sorry truly is the hardest word.

"As usual the First Minister, in crisis, blames everyone, blames early, and blames often."

He went on to challenge him to drop the local income tax plans for good - the SNP have said the plan is being shelved until after the next election - arguing it was a bad policy that would damage the economy and destroy local services.

"The First Minister tried to con the voters once with local income tax.

"To try and con them again would be simply shameless.

"Will he just dump this unwanted and unworkable tax for good?"

Mr Salmond said Labour and the Tories had combined to vote down local income tax. He went on to tell MSPs that 46 out of 94 headline SNP election manifesto commitments had already been achieved even before the half-way point of its parliamentary term.

"I don't think Iain Gray is in any position to lecture any party about proposals for council tax finance," said the First Minister.

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