Groups representing the disabled expressed deep concern after it was announced that incapacity benefit would be abolished and split into a two-tier system that distinguishes between the severely disabled and people temporarily unfit for work.
Ministers will extend their "carrot and stick" approach - used with the unemployed - to the sick and disabled under the biggest changes to their benefits since the welfare state was created. From 2008, all new claimants will receive the equivalent of jobseeker's allowance, currently pounds 55 a week, while their condition is assessed. Those capable of work will be paid between pounds 80 and pounds 90 if they attend job-focused interviews and then move on to rehabilitation or training.
If they refuse, they will remain on pounds 55 a week and will not qualify for the higher payments that apply automatically after six months and then a year. The severely disabled who are unlikely to find work will be paid between pounds 90 and pounds 100 a week.
The shake-up was included in a five-year welfare plan unveiled yesterday by Alan Johnson, the Work and Pensions Secretary. Although he said they would not apply to the existing 2.7 million claimants, the Government will consider ways of drawing them into the new system when they attend their interviews or medical assessments after 2008.
People moving from incapacity into work will qualify for a pounds 40-a-week top-up to their wages under a "pathways to work" scheme based on intensive counselling that will be extended across the country between now and 2008. Existing claimants will be able to "opt in" to the process but will not be compelled to take part.
Mr Johnson said incapacity benefit would be replaced by two schemes - rehabilitation support allowance for the majority and disability and sickness allowance for the severely disabled. "We know that a million people on incapacity benefit want to work," he said. "So we must end the stifling of ambition caused by a system which for too long has assumed that all people with health conditions and disabilities are condemned not to work and instead live in isolation as passive recipients of benefits. Our radical reform should mean that sickness benefit represents a pause in people's working life, not a full stop."
The Disability Benefits Consortium, representing 19 groups, criticised the plans as too draconian. Richard Brook, the chief executive of Mind, said: "We believe that today's announcement raises serious issues about coercion and penalising people depending on how they are perceived rather than their actual disability or medical condition."
Lorna Reith, the chief executive of the consortium, said: "We are deeply concerned about the amount of power that could be given to officials in Jobcentre Plus offices. Is the Government seriously suggesting junior staff are to decide whether or not someone who's had a mental breakdown is ready to start looking for work?"
Peter Cardy, of Macmillan Cancer Relief, said: "People undergoing chemotherapy or radiotherapy have enough stress to cope with as it is without being dragooned into interviews to talk about returning to work."
David Willetts, the Conservative spokesman on work and pensions, dismissed the planned shake-up as a "cop out".