Single parents of children as young as two should be forced to seek work, Labour modernisers said despite fears such moves could push more into poverty during the recession.

Savings in benefits under the shake-up, which goes much further than either Government or Conservative plans, would be used to help fund universal childcare and higher maternity leave payments.

The policy is one of a raft of radical steps being urged on Gordon Brown by New Labour think-tank Progress.

They also include a right for private firms and charities to bid to run more public services and 10-year "franchises" for services such as GPs and colleges, devised by Blairite former cabinet minister Alan Milburn.

He will be among several senior party figures, including cabinet ministers such as Lord Mandelson and Hazel Blears, speaking at the organisation's annual conference in London.

A senior government welfare adviser recently called on the Government to postpone moves to force single parents with a youngest child of 12 or over to seek work or training or face sanctions including benefit cuts.

Sir Richard Tilt, the chairman of the social security advisory committee, said the economic downturn was making it harder for people to find work.

Work and Pensions Secretary James Purnell, who is speaking at the event but is not expected to tackle specific reforms, has rejected the criticisms and says the recession makes such reforms more important.

He will use his speech to deny claims the Government's economic rescue package represented "the death of New Labour" and warn getting the country through the recession would not be enough to win the next election.

"Gordon Brown and Alistair Darling have rightly been congratulated for helping lead the world's response to the credit crunch. But if we think that we will be rewarded in the long term for that fact alone, we will be making a mistake," he will say.

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