* Darling and Osborne face off over credit rating risks
* Conservatives say Labour not cutting deficit fast enough
* Labour govt says recovery must come before cuts
* Bond futures tumble in further reaction to PBR
By Matt Falloon and Sumeet Desai
LONDON, Dec 10 (Reuters) - Britain may lose its top credit rating unless borrowing is cut faster, Conservative economics chief George Osborne said on Thursday, but finance minister Alistair Darling said Labour's plans would soothe markets.
In interviews with Reuters a day after Darling outlined plans to halve the budget deficit over four years, both men laid out different approaches to fiscal policy which are likely to dictate much of the political debate before an election in 2010.
Opinion polls put the Conservatives out in front but some point to a hung parliament -- the nightmare scenario for investors eager to see swift action on a budget deficit set to reach nearly 13 percent of gross domestic product this year.
After digesting the pre-budget report overnight markets remained concerned, driving British government bond futures down by more than a full point.
"The bulk of dealing with the deficit has to come from spending restraint," Osborne said. "Unfortunately, the measures announced yesterday don't start tackling the deficit until 2014/15 and that is far too late."
"The thing I am aiming for is making sure that Britain keeps its credit rating."
Ratings agencies have warned that Britain's triple-A credit rating, which enables the government to borrow more cheaply than less credit-worthy nations, could be at risk unless the government lays out a credible plan to cut the deficit.
Darling argued he had done just that with Wednesday's pre-budget report.
"The steps that we have taken will reassure people that we have a credible, deliverable, realistic and fair plan to cut government borrowing over a four year period," he said.
Going any faster than that, while economic conditions remained uncertain, would not be sensible, he said.
DIVIDING LINE
The Conservatives, however, would deliver an emergency budget if victorious next year and argue that hacking back debt will safeguard confidence and keep interest rates low, enabling a sustainable recovery to take root.
"We've got to keep interest rates as low as possible for as long possible," Osborne said.
The Conservative leadership believes the Bank of England would do what is necessary to drive growth forward, allowing the party to get painful cuts in spending out of the way quickly.
The two approaches will form the key dividing lines in the run in to an election that must be called by June 2010, with markets largely in the dark so far as to how exactly Labour would halve the deficit or how the Conservatives would do more.
Labour have said they want the wealthiest in society to bear the brunt of deficit-busting tax rises -- although they are also hiking taxes for the many -- and are also banking on a strong recovery to boost tax revenues and reduce welfare spending.
But significant spending cuts are also on the cards and, whichever way voting goes next year, a painful few years await.
"The medium-term outlook for the UK public finances remains a concern," said Fortis economist Nick Kounis.
"However, the truth is that the focus is really on the party -- most likely the Conservatives -- that will be in power after the election and whether they will get a large enough majority to allow aggressive fiscal consolidation to take place."
(Editing by Toby Chopra)