The Scottish government has said it would "vigorously oppose" any attempt by the chancellor to scrap national pay rates for public sector workers.
George Osborne is said to want the pay of some civil servants brought into line with local private sector wages.
But Scottish Finance Secretary John Swinney said the move would be "a disaster".
He told BBC Scotland it would mean a reduction in pay for people living outside the south east of England.
Mr Osborne is expected to say in Wednesday's UK Budget that civil servants, such as Jobcentre and DVLA staff, should have their pay brought into line with private sector salaries in their regions.
It is understood Mr Osborne believes that factors such as the cost of living in an area should also be taken into account when setting the pay of civil servants such as Jobcentre and DVLA staff.
Treasury sources have told the BBC the move would be an attempt to prevent private firms being "crowded out" because they cannot compete with the wage levels being offered in areas where public sector workers are paid more than those in the private sector.
Treasury research has suggested the pay gap ranges from 18% in Wales to 0.5% in the south-east of England.
In Scotland, women in the public sector are said to earn nearly 20% more than their private sector counterparts, while for men the difference is about 6%.
But trade unions have said setting pay levels locally would lead to huge disparities across the country and could drive down pay in many parts of the UK.
Speaking on the Sunday Politics Scotland programme, Mr Swinney said any such move would have a "potentially disastrous impact" not only on employment and remuneration, but also on public expenditure within Scotland, Wales and Northern Ireland.
And he said he had already made his "complete opposition clear" to the Treasury on the approach they were taking to regional pay.
Mr Swinney said: "What the chancellor's proposal is rumoured to be is a reduction in pay for people in areas outwith the south of England, and what one might consider to be areas of congestion in the jobs market.
"That will be a disastrous approach if it's taken by the chancellor because it will undermine economic confidence in areas far removed from the south east of England and it will do absolutely nothing to solve the regional inequities that exist within the United Kingdom.
"My counterparts in Wales and Northern Ireland are as vociferously opposed to this as I am."
Mr Swinney said he would not intervene to use Scottish government funds to top up public sector pay rates over which he had "no control".
He added: "Let's be absolutely clear - the Scottish government will go absolutely nowhere near this proposal for the areas of pay policy that are under our control."
Scottish Labour finance spokesman Ken Macintosh said: "The attack on the public sector through regional pay deals is wrong and is bad for Scotland, and bad for everywhere in the UK outside London."