Chancellor George Osborne is facing renewed controversy over welfare cuts after it emerged he wanted to slash at least £2.5 billion from the budget for long-term sickness benefits.
Mr Osborne put that figure on reductions in Employment and Support Allowance payments in a letter sent in June to Work and Pensions Secretary Iain Duncan Smith, the Observer reported.
It was seized on by Labour as evidence that the Government planned "vicious cuts on the poorest" as part of its efforts to massively cut public spending to tackle the UK's record deficit.
But Mr Duncan Smith's camp insisted no decisions had been taken on where the Treasury axe would fall and that he would not allow any cuts which affected anyone "too poorly to work".
Earlier this week, Mr Osborne said another £4 billion would be taken from the "out of control" benefits bill - on top of an £11 billion cut announced in June's emergency Budget.
On Monday he is expected to be forced to explain that figure to MPs after some Liberal Democrat backbenchers reacted furiously to the announcement - made in a BBC interview.
Fears over the impact of cuts on the most vulnerable are fuelling dissent within the Tory-Lib Dem coalition with just over a month until Mr Osborne reveals the results of his spending review.
As ministers struggle to agree ways of slashing spending by around 25% from their budgets, negotiations between the Treasury and Mr Duncan Smith are believed to be among the most difficult. The former party leader is seeking up front investment for reforms aimed at making everyone better off in work than on benefits - which he says will save money in the longer term.
Mr Osborne has already signalled publicly that ESA - which replaced Incapacity Benefit - will be one target of his renewed benefits crackdown.
DWP sources played down the significance of the letter - part of correspondence dating back to before June's Budget - insisting that while ESA would be reformed no decisions had been taken and that Mr Duncan Smith "absolutely will support anyone who is too poorly to work".
Chancellor George Osborne is facing renewed controversy over welfare cuts after it emerged he wanted to slash at least £2.5 billion from the budget for long-term sickness benefits.
Mr Osborne put that figure on reductions in Employment and Support Allowance payments in a letter sent in June to Work and Pensions Secretary Iain Duncan Smith, the Observer reported.
It was seized on by Labour as evidence that the Government planned "vicious cuts on the poorest" as part of its efforts to massively cut public spending to tackle the UK's record deficit.
But Mr Duncan Smith's camp insisted no decisions had been taken on where the Treasury axe would fall and that he would not allow any cuts which affected anyone "too poorly to work".
Earlier this week, Mr Osborne said another £4 billion would be taken from the "out of control" benefits bill - on top of an £11 billion cut announced in June's emergency Budget.
On Monday he is expected to be forced to explain that figure to MPs after some Liberal Democrat backbenchers reacted furiously to the announcement - made in a BBC interview.
Fears over the impact of cuts on the most vulnerable are fuelling dissent within the Tory-Lib Dem coalition with just over a month until Mr Osborne reveals the results of his spending review.
As ministers struggle to agree ways of slashing spending by around 25% from their budgets, negotiations between the Treasury and Mr Duncan Smith are believed to be among the most difficult. The former party leader is seeking up front investment for reforms aimed at making everyone better off in work than on benefits - which he says will save money in the longer term.
Mr Osborne has already signalled publicly that ESA - which replaced Incapacity Benefit - will be one target of his renewed benefits crackdown.
DWP sources played down the significance of the letter - part of correspondence dating back to before June's Budget - insisting that while ESA would be reformed no decisions had been taken and that Mr Duncan Smith "absolutely will support anyone who is too poorly to work".