Temporary workers, such as IT contractors, will be the first victims of the cuts to public sector spending, a new report shows.

The Recruitment & Employment Confederation (REC) has revealed that up to 120,000 temporary jobs have been culled in the last three months, as the squeeze on expenditure begins.

It is believed that up to 600,000 temporary and contract workers are on assignment with public bodies in an average week, but agencies are already seeing that placements have fallen by around 20 per cent.

According to the group's chief executive Kevin Green, analysts have not factored in the effect on temporary workers when trying to establish what will come of the cuts.

"The opportunity for public sector employers is that flexible staffing arrangements should form part of cost effective staffing models. Flexible staffing is part of the solution, not the problem," he said.

Employment growth has been slowly grinding to a halt in the last few months, the REC's recent Report on Jobs claimed.