Osborne targets benefits lifestyle

The move is on top of an £11 billion reduction made in June's Budget, and Mr Osborne said he wanted to tackle those who see claiming out-of-work benefits as a "lifestyle choice".

But he failed to rule out changes to more sensitive help such as the winter fuel allowance and came under immediate fire from two Liberal Democrat MPs who pledged to oppose the fresh assault.

Bob Russell and Mike Hancock accused the Chancellor of failing to consult the Tories' coalition partners, and criticised his decision to announce the fresh assault in a television interview.

Mr Osborne used a BBC interview to confirm that further reductions in benefits would form part of his package of severe cuts to public spending to be unveiled on October 20.

"This will be done in a way that encourages people into work but there will be further welfare cuts - they will amount to several billion pounds additional to what I announced in the Budget because I think the people of this country understand this choice and they have chosen for us as a Government to push further on welfare reform," he said.

"There are five million people living on permanent out-of-work benefits. That is a tragedy for them and fiscally unsustainable for us as a country - we can't afford it any more," he added.

"Of course, people who are disabled, people who are vulnerable, people who need protection will get our protection, and more.

"But people who think it's a lifestyle choice to just sit on out-of-work benefits - that lifestyle choice is going to come to an end. The money won't be there."

Mr Osborne would not be drawn on exactly where the axe would also fall amid concerns universal benefits such as the winter fuel payment and child benefit could be targeted.