Prime Minister David Cameron has defended the decision to charge VAT on hot food served by shops and supermarkets.

Mr Cameron said that the move - which will add 20% to the cost of hot pies and pasties sold by shops such as Greggs - would defend takeaway restaurants against competition from major chains.

Chancellor George Osborne was accused of being out of touch after he was unable to recall when he last bought a pasty as he answered questions on Tuesday about the so-called "pie tax" in Parliament.

But Mr Cameron was quick to declare himself a keen pasty-eater, telling reporters he recently bought a large one from an outlet at Leeds station, adding: "And very good it was too."

Greggs chief executive Ken McMeikan has said ministers had "lost touch" and did not appreciate the impact the changes to VAT rules would have on ordinary people. The high street chain saw millions wiped off its shares after the Budget closed a loophole that has meant some hot takeaway foods, such as sausage rolls and pasties, escaped the duty.

But speaking at a Downing Street press conference, Mr Cameron said: "Many, many small businesses in this country, whether selling fried chicken or fish and chips or hot takeaway pies, are already paying VAT. What the Government has to try to do is make sure the VAT rules are fairly applied.

"I don't think it is fair that the small businessman running a fried chicken takeaway is having to charge his customers VAT but the big supermarket isn't having to pay VAT on fresh hot chicken. It's about trying to have a sensible VAT arrangement where the boundaries are sensible."

Leeds station's last pasty shop closed earlier this month. The Cornish Bakehouse concession stands empty in the main concourse. Workers said the station once had a branch of the West Cornwall Pasty Co but it shut in 2007.

Labour leader Ed Miliband talked to the press outside a Greggs outlet in Redditch, where he and Ed Balls made a brief stop to buy eight sausage rolls at a cost of £4.70. He said: "There is a serious point here which is that the Government is hitting people's living standards in every way they can."

Mr Cameron did not appear exactly sure of the details of his pasty purchase when he mentioned it during a Downing Street press conference about the Olympics: "I am a pasty-eater myself. I go to Cornwall on holiday, I love a hot pasty. I think the last one I bought was from the West Cornwall Pasty Company. I seem to remember I was in Leeds station at the time and the choice was whether to have one of their small ones or one of their large ones."