Ministers are considering abandoning plans to freeze some disability benefits, the BBC understands.
Initial reports had suggested Personal Independence Payments (PIP) would not rise in line with inflation for a year, but many usually loyal Labour MPs have voiced strong opposition in meetings in No10, as well as to party whips and ministers.
The eligibility criteria for PIP will be tightened with the government expected to cut billions of pounds from the welfare budget, but dropping the freeze could avoid a potentially damaging vote in the Commons.
Work and Pensions Secretary Liz Kendall will set out details of reforms to welfare in a green paper next week.
Part of the reform will also include a “right to try” guarantee – allowing people with disabilities the opportunity to take up employment without the risk of losing their benefits if it does not work out.
After Liz Kendell lays out her plans, Chancellor Rachel Reeves will then reveal the full scale of welfare spending reductions, expected to be between £5bn and £6bn, in her Spring Statement on 26 March.
On Friday she said the government needed to “get a grip” on the welfare bill, saying the system is not working for the taxpayer or recipients.
Total spending on health and disability benefits is forecast to rise from £64.7bn in 2023-24 to £100.7bn in 2029-30. The biggest contributor to this increase would be from welfare spending on working-age adults, according to the Office for Budget Responsibility.
The second largest single element of the working-age welfare bill is PIP.
In 2023-24, PIP totalled £18bn, a figure projected to almost double to £34bn by 2029-30. That would mean the number of claimants rising from 2.7 million to 4.2 million.
With Labour holding a large Commons majority, a freeze to PIP would be likely to pass a vote, but internal divisions would be highlighted.
Sources told the BBC the measures to be announced would still be difficult and restricting who qualifies for PIP was likely to concern some Labour MPs.
Even with the tighter eligibility measures planned, sources said spending on PIP would still rise but not as quickly as otherwise forecast.
PIP is intended to help with the extra living costs for people who have a long-term physical or mental health condition. Some recipients are in work and argue it provides essential support enabling them to remain in employment. But it also goes to those who are heavily disabled and unable to work.
A number of MPs broadly supportive of welfare reform have told the BBC they have received assurances that severely disabled people would not be expected to work and would not lose entitlement to benefits.
The expected changes to the benefit system come after the government announced it would be axing NHS England, the arms-length body currently responsible for running the health service in England.
Health Secretary Wes Streeting has indicated he plans to make further cuts which he says will improve the efficiency of the health service, writing in the Sunday Telegraph that there is “far more change to come”.
He said “hundreds” of official bodies had been identified as “cluttering the patient safety and regulatory landscape”.
“Patients and staff alike can see the inefficiency and waste in the health service. My team and I are going through budgets line by line, with a relentless focus on slashing bloated bureaucracy,” he said.
A Department for Work and Pensions spokesperson said: “We have been clear that the current welfare system is broken and needs reform, so that it helps long-term sick and disabled people who can work to find employment, ensuring people receive the support they need, while being fair to the taxpayer.
“Without reform more people will be locked out of jobs, despite many wanting to work. That is not just bad for the economy, it’s bad for people too.”
