A report that Disability Living Allowance, currently claimed by about 1.8 million disabled people, might be switched to local councils to finance community care - as part of an attempt to make savings on the pounds 23bn disability benefits bill - was rejected by a senior government source last night.
With the entire welfare programme currently under review, ministers are reluctant to play the game of responding to speculative scares.
But Alistair Darling, Chief Secretary to the Treasury and the Government's spending axeman, told BBC Radio 4's Today programme: "The conclusion of this review will not be published until the middle of next year and it will be entirely consistent with our manifesto and will also be consistent with our principles of fairness and opportunity."
He confirmed that Harriet Harman, Secretary of State for Social Security, and Frank Dobson, Secretary of State for Health, had been in contact with disability groups over the past few weeks.
"My colleagues have been exploring how we can use the New Deal to get people into work," Mr Darling said.
"It is quite clear that people supported us because we were prepared to review government spending right across the board and to ensure that we can get the priorities people want."
He added: "This government's priority is to get as many people off benefits and into work, so they can create opportunities for themselves and their families and that is what we are determined to do."
Fred Heddell, the chief executive of Mencap, said: "We are well aware that the Government is thinking the unthinkable and we have taken the lead in helping them to identify the implications of `possible' changes.
"The reality is that disabled people have low incomes and high expenses.
"Ministers know this and we think it unlikely that this government will want to destroy what its predecessors created. The facts are against them and the public will be against them.
"For a severely disabled person not in employment total benefit levels are a small fraction of the earnings that the non-disabled worker takes for granted. Taxing disability is taxing property."
Iain Duncan Smith, the Conservatives' social security spokesman, said: "The new tax on the most vulnerable in society would not only break Labour's pledge not to levy new taxes, but confirm that new Labour says one thing and does another."
For the Liberal Democrats, Paul Burstow, the MP for Sutton and Cheam, said: "Disabled people are already alarmed and the Government must come to the House and set out their intentions. They cannot hide behind a blizzard of reviews."