Britain believes a financial transactions tax would only work if implemented globally and attacked European Union partners for backing the plan while reneging on aid commitments.
Germany and France have been pushing for the introduction of a Tobin tax in the European Union but Britain is strongly opposed, fearing it will hobble its financial services industry, driving business away.
There is widespread support for the principles behind such a tax but it has to be adopted on a global basis, Prime Minister David Cameron told parliament on the eve of a G20 summit of world leaders.
We must be careful that we don't allow other countries, including some other European countries, to use a campaign for this tax that they know is unlikely to be adopted in the short term as an excuse for getting off their aid commitments.
At a G8 summit in France in May, Cameron attacked fellow world leaders for forgetting about promises they have made to the poor.
Cameron has said Britain will be the first G8 country to hit a target of spending 0.7 percent of its national income on aid by 2013. Aid spending has been ringfenced at a time of deep cuts elsewhere.
Support for the tax came from an unusual quarter on Wednesday when Archbishop of Canterbury Rowan Williams, head of the Church of England, praised it in an opinion piece in the Financial Times newspaper.
Williams has become embroiled in the politics of finance after anti-capitalism protesters set up camp on the steps of London's landmark St Paul's Cathedral, posing a dilemma for the hierarchy on whether to support them.
Hopes for a global Tobin tax -- named after the U.S. economist who first mooted it in the 1970s -- have been dented by opposition from the United States and Canada as well as Britain.
Andrew Tyrie, head of parliament's influential Treasury committee, has written to Chancellor George Osborne setting out concerns over the proposal, many of which mirror the coalition's own misgivings.
Posing a series of questions, Tyrie asked Osborne to spell out the impact on foreign exchange, financial derivatives and futures transactions.
The Treasury said it would give a detailed response later.
The government will continue to engage with its international partners on the idea of a financial transaction tax, and has no objection to it in principle at a global level, a spokesman said.
The government believes that any financial transaction tax would have to apply globally, and there are a number of practical issues that would also need to be worked through, he added.
Brendan Barber, head of the main TUC union body, backed plans for a tax to milk a financial services sector it blames for the global downturn.
G20 leaders must prioritise investment in jobs and curb the excess of the finance sector with a Robin Hood Tax on financial transactions, said Barber, who will be part of a union delegation meeting world leaders in Cannes.
(Editing by Anna Willard and Hugh Lawson)