By Tim Ross, Political Correspondent

Justine Greening, the International Development Secretary, told MPs that no new financial aid programmes would be agreed for India, with immediate effect.

Existing grants that have already been signed off will continue until the last expires in 2015, when all UK financial aid to the country will cease, she said.

However, officials confirmed that Britain will continue to provide an estimated £30 million of “technical assistance” to India after the financial aid dries. The government said this was a recognition of India’s “successful transition” to a major global economic power.

Miss Greening’s decision follows a visit to India for talks on future aid arrangements this week.

Officials said she was told that the Indian government valued Britain’s “technical assistance” far more than the grants that currently comprise the bulk of the UK’s £280 million annual aid programme to the country.

In February this year, Pranab Mukherjee, then India’s finance minister and now the country’s president, suggested Britain’s aid programme represented “a peanut in our total development expenditure”.

Miss Greening said it was time for Britain and India “to move to a relationship focussing on skills-sharing rather than aid”.

“Having visited India I have seen first hand the tremendous progress being made. India is successfully developing and our own bilateral relationship has to keep up.

“It is of course critical that we fulfil all the commitments we have already made and that we continue with those short-term projects already underway which are an important part of the UK and Government of India’s development programme.”

The UK’s overall financial contribution to India since the Coalition took office is expected to total more than £1 billion.

After 2015, the contribution of Britain’s technical expertise to development programmes in India will cost an estimated £30 million, about one tenth of the current aid budget to the country.

New programmes will focus on sharing British expertise in areas such as growth and trade, skills training and healthcare. Private sector projects will also be encouraged with British help, in an effort to benefit India’s poor and generate a profit at the same time.

As existing grants are phased out, the government expects to save around £200 million over the next three years.

In recent years, India has emerged as a major economic power and now has its own space programme as well as an international development scheme providing £328 million a year to other countries.

Miss Greening’s announcement is likely to be seen as a sign that Britain intends to cut aid to wealthier nations, including those that are preparing to enter the EU, and focus instead on the poorest countries.

She told the Conservative conference last month: “We should recognise that as countries get richer, we need to be responsible about how we transition in our relationship with them from aid to trade.”

Some Tories want David Cameron to abandon the promise to spent 0.7 per cent of national income on overseas aid, an amount that will reach £12.6 billion by 2014.

This commitment will not be affected by the announcement on India and officials said money saved was likely to be spent on aid to poorer parts of the world.

Gerald Howarth, the Conservative MP for Aldershot and a former defence minister, welcomed the cuts and said he would like the overall development budget to be reduced. “I welcome this as a first step in hopefully ultimately reducing the overseas aid budget,” he said.

Robert Oxley, Campaign Manager at the TaxPayers’ Alliance, told BBC News that ministers should stop aid to India sooner.

“The Government has been roundly criticised for continuing to send money to India. It’s been £280m and let’s not kid ourselves, that budget isn’t stopping now. It will continue on till 2015,” he said.

“This is also only a bit of spin. Ministers have been saying they were going to undo this programme for quite a while.”

He suggsted India did not need of British aid. “It’s got space programmes, it’s got quite a significant defence force and it is the largest democracy in the world and so this isn’t about Britain abandoning its commitments but saying there is a limited pot of money, where’s it going to go?”

However, charities criticised the decision. Oxfam’s director of campaigns and policy, Phil Bloomer, said: “We’re concerned that completely withdrawing British aid to India by 2015 is too hasty. It’s crucial that we don’t cut off money which gives a lifeline to poor families, and a third of the world’s poorest people live in India.

“The scale of the challenge remains huge, as 250 million Indian citizens go to bed hungry tonight.”