Unveiling of benefit changes scheme

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The controversial reforms were hailed by Work and Pensions Secretary James Purnell as the biggest shake-up of the modern welfare state since the Beveridge Report of the 1940s.

And they were backed by Conservative leader David Cameron, who offered ministers the support of his MPs to ensure that the package is not derailed by a Labour backbench rebellion in the House of Commons.

Under the proposals laid out in Mr Purnell's Welfare Reform Green Paper, incapacity benefit will be abolished by 2013 and income support will also be scrapped.

In their place will be a simplified system of two benefits - Employment Support Allowance for those with medical problems which limit their ability to work and JobSeekers' Allowance for those who are fit to work.

A leaked late draft of the Green Paper revealed that ministers are aiming for a record 80% employment rate - up from the current 75% - and made clear their insistence that there will be "no right to a life on benefits" for anyone capable of working.

All incapacity benefit claimants will undergo medical tests to determine what capacity they have for employment, and only full-time carers and disabled people "with the greatest needs" will be exempt from being expected to find work.

Unemployed drug addicts who lie to get benefits will be forced to repay the money and could face jail, while jobless people who take drugs will be banned from receiving dole money unless they accept treatment.

Lone parents with children aged seven or more will be expected to seek work.

The long-term unemployed will face US-style "work for dole" programmes requiring them to undertake useful activities to ensure they make a "fair contribution" in return for state support.