Boris Johnson has extended his lead in the race to become Britain's next Prime Minister, as Philip Hammond today warns the Tory leadership candidates that a no-deal Brexit would “risk the Union” and “soak up” the £27 billion fiscal headroom he has built up.

The Chancellor's dire warning comes as the parliamentary stage of the Conservative contest enters its tense final day.

Fears have been expressed by MPs that the Johnson camp will use “heavy-duty shenanigans” to lend votes to Jeremy Hunt in a bid to ensure Michael Gove is kept out of the final two-candidate stage.

In round three, Boris Johnson was again the runaway winner, increasing his votes by 17 to a total of 143; 89 more than his nearest rival. While Rory Stewart was eliminated as his supporters fell away. His vote reduced from 37 to 27.

The Foreign Secretary retained second spot - up eight votes to 54 - but only just. The Environment Secretary increased his tally by 10 to 51.

Sajid Javid, the Home Secretary and self-proclaimed outsider, increased his votes from 33 to 38 to stay in the race.

In what could prove to be his final set-piece hurrah as Chancellor, Mr Hammond will use his annual Mansion House speech before 600 financial services chiefs and journalists to give a stark warning to the candidates about the perils of leaving the EU without a deal.

Stressing how his party is the “Conservative and Unionist Party,” he will say it has two core beliefs: ensuring Britain’s prosperity through prudent management of public finances and the four nations of the country are more successful when they act as one United Kingdom.

“I cannot imagine a Conservative and Unionist-led Government actively pursuing a no-deal Brexit; willing to risk the Union and our economic prosperity. And a General Election that could put Jeremy Corbyn in Downing Street, to boot.”

And in a passionate message, the Chancellor will declare: “I will not concede the very ground we stand on. I will fight and fight again to remake the case for pragmatism and, yes, for compromise in our politics; to ensure an outcome that protects the Union and the prosperity of the United Kingdom.”

Referring to “immutable truths” – MPs will not support Theresa May’s agreed deal with Brussels nor allow a no-deal outcome and the EU will not renegotiate – Mr Hammond will call on the leadership candidates to each produce their Plan B.

“The candidates need realistic strategies for taking the UK economy out of the holding pattern in which it has been stuck for the last nine months and landing it safely on the runway marked ‘prosperity Brexit’.

“Because we cannot allow ourselves to be forced to choose between our democracy and our prosperity.

“If the new Prime Minister cannot end the deadlock in Parliament, then he will have to explore other democratic mechanisms to break the impasse. Because if he fails, his job will be on the line and so, too, will the jobs and prosperity of millions of our fellow citizens.”

At Westminster, supporters of Mr Gove warned the Johnson camp not to “undermine the integrity” of the leadership contest by lending votes to Mr Hunt.

One MP told The Herald there was “chat about votes being lent to Hunt” and claimed the momentum was now with Mr Gove, who has put on almost 20 votes since the first round.

Another said tactical voting against the Scot was a certainty, describing the former Foreign Secretary’s campaign chief, Gavin Williamson, as a “modern-day Machiavelli”.

One Scottish Gove supporter said the third round had produced a “brilliant result” for his favoured candidate. “He is very much in touch for second place and I expect further movement upwards in both of tomorrow’s ballots.”

Following the BBC TV debate, a senior minister told The Herald Mr Stewart had “peaked” and there was a growing expectation among Tory MPs he would be knocked out.

However, as the voting took place in Commons Committee Room 14, talk was that Mr Johnson’s supporters were planning to lend their votes to Mr Javid to eliminate the International Development Secretary from the contest.

Mr Stewart confirmed he was in talks with Mr Gove about “combining forces”; an apparent acceptance that his chances were slipping away.

However, in the end the lending of votes was not necessary as Mr Stewart, having almost doubled his vote to 37 in the second round, lost 10 in the third.

The Scot tweeted: "I am so moved and inspired by the support I have received over the last few weeks; it has given me a new faith in politics, a new belief in our country.

"I didn't get enough MPs to believe today but they will. I remain deeply committed to you and to this country."

The Secretary of State, who declined to say who he would now back, said he was looking forward to seeing his two children, aged two and four, adding: "I've been getting up at six in the morning and going to bed at two in the morning."

Mr Johnson, the runaway frontrunner, thanked his supporters “especially on my birthday![he is 55],” saying: “We've come a long way but we have much further to go."

A Scottish supporter said: “Stewart being knocked out lets the debate get back to how we are going to leave rather than re-running the EU referendum. Boris has shown he attracts a broad vote, pulling the party together.”

Mr Hunt vowed that if he made the final stage, he would put his “heart and soul into giving Boris the contest of his life”.

In a video posted on Twitter, Mr Gove thanked his supporters and said he was “closing the gap on second place”.

He added: "I'm determined to make this a contest of ideas in which we can all ensure we play our part in building a better Britain."

Mr Javid made clear he would not pull out and tweeted: "Delighted to make it through to the final day of MPs voting. Grateful for the support of many excellent colleagues. We can do this!”