The Prime Minister has announced he is to scrap the Department for International Development in a merger with the Foreign Office.

The move, which has come under fire from former international development secretaries and Opposition MPs, will see the creation of the Foreign, Commonwealth and Development Office.

Boris Johnson, in a statement to MPs, said it was “outdated” to keep the departments separate.

He told the Commons: “We must now strengthen our position in an intensely competitive world by making sensible changes.

“And so I have decided to merge Dfid with the Foreign and Commonwealth Office to create a new department, the Foreign, Commonwealth and Development Office.”

Labour hit out at the move, with shadow foreign secretary Lisa Nandy labelling it a retreat.

She tweeted: “Extraordinary that in the middle of a global crisis, the UK is retreating from the world.

“Aid has long been one of Britain’s strengths helping us to build strong alliances, act as a moral force and creating greater global security.

“Once again we are diminished in the world.”

Work will begin immediately on the merger and the department will be formally established in early September, with Foreign Secretary Dominic Raab in charge of the new-look operation.

International Development Secretary Anne-Marie Trevelyan will remain in post until the merger is complete.

Downing Street sources indicated that there would be no compulsory redundancies.

The target of spending 0.7% of GNI on development, which was part of the December manifesto and is enshrined in law, will remain, it has been confirmed.

Rory Stewart, both a former international development secretary and foreign office minister, told PA news agency he would have been “strongly” arguing against the shake-up if he was still in office.

He added: “I don’t think it is the smart option.

“There are many other things we need to be concentrating on at the moment.

“It will lead to a lot of disruption, a lot of uncertainty at a time when the Foreign Office has an enormous amount to be focused on.”

It was rumoured during the February reshuffle that Boris Johnson was preparing to scrap the post of international development secretary before appointing Ms Trevelyan to the role.

Tory MP Andrew Mitchell, who served as international development secretary during the coalition government, joined in criticising the proposals, saying “abolishing Dfid would be a quite extraordinary mistake”.

In a statement to PA, the former Cabinet minister said it would “destroy one of the most effective and respected engines of international development anywhere in the world”.