Gillard faces showdown to pass flood levy as Opposition vows to fight it

• * Labor faces battle to pass flood rescue levy
• * Opposition vows to fight unfair tax on families
• * Labor relying on Independents to pass package
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THE first big federal political showdown for the year is looming, with Opposition Leader Tony Abbott vowing to fight a Queensland flood levy to be announced today.

Prime Minister Julia Gillard will unveil a rescue package, including increasing the Medicare levy by 0.5 per cent, to offset more than $5 billion Treasury expects Canberra needs to rebuild the flood-ravaged Sunshine State.

Senior ministers will endorse the major package this morning, with Cabinet's razor gang agreeing to bring forward up to $10 billion in spending cuts.

But Ms Gillard faces an uphill battle to win parliamentary backing, with Mr Abbott readying for a fight and key crossbench MPs yet to back the measure.

Independent Tony Windsor said he was not "rolled gold" in supporting the one-off levy. The other independents could not be contacted last night.

Senior ministers have backed billions of dollars in spending cuts, some of which will be announced by Ms Gillard during a national address at noon.

Her spokesman confirmed last night there would be "significant cuts, and hard decisions have been necessary to find the resources needed to rebuild Queensland".

These savings and the billions raised by the flood levy will go direct to the worst-hit areas in southeast Queensland which were devastated, costing at least 22 lives.

But the Opposition Leader - in his strongest comments yet - said he would oppose the flood levy in Parliament: "As soon as the Government puts on a tax, it is not an expression of generosity. It is the very opposite of mateship once it is compulsory."

Labor MPs admitted they were nervous at the task of "selling" another tax.

Mr Windsor - whose vote will be critical in the House of Representatives - has given the Government the jitters by saying he is no certainty to back the levy.

He wants a permanent "Future Fund-style" scheme to pay for natural disasters.

"I am not a rolled gold supporter of a one-off levy. I want to see the fine print," Mr Windsor said.

Ms Gillard's minority government relies on the votes of minor party and independents in both houses.

The nation's peak welfare body ACOSS has also warned the Government against using the flood crisis to justify cuts in spending.