Iain Duncan Smith has criticised the Big Issue magazine saying that it provides a way for immigrants from eastern Europe to claim benefits in Britain.
Mr Duncan Smith said the magazine was being used "more and more" as a foothold for Romanians and other Europeans to access tax credits.
The work and pensions secretary, who was answering a question from the floor at an event in Berlin, said that immigrants from Europe were "immediately" able to claim tax credits on arrival in Britain due to their self-employed status as magazine vendors.
The Times reported that Mr Duncan Smith, who was in Germany speaking about British welfare policy, also attacked EU interference in immigration matters saying it was “unwarranted and unwanted”.
When asked by a member of the audience for examples of so-called "benefits tourism" he admitted he did not have anything other than anecdotal examples, but went on to attack the Big Issue magazine.
“You need to deal with the perception and there is a core element of truth that in that influx a number of people did find themselves drifting in and out of benefits,” Mr Duncan Smith said, The Times reported.
“A good example of that is the Big Issue, a magazine which is a brilliant idea by a brilliant individual who himself was homeless. It is wonderful,” he said.
"But actually what is happening progressively, more and more, is people mostly from southern and eastern Europe have actually ended up being Big Issue sellers and they claim, as self-employed, immediately, tax credits."
"So when we talk about benefits, they are not just out-of-work benefits, they are also in-work benefits that are being claimed."
"Romanians have been claiming those for some time now, regardless of when they came in. We had a reasonable influx of Romanians long before we opened the doors on January 1. "
"They came in on the self-employment level and that is an issue that needs to be dealt with. So [when] I talk about benefit tourism in a sense, we are talking about in-work benefit tourism,” he said.
The Big Issue responded angrily to Mr Duncan Smith's comments, and accused him of using the magazine as a scapegoat for the loophole in the law.
“If the government feels that the rules applying to in-work and out-of-work benefits need changing, then they need to look at that carefully. In the meantime, it is wrong to promote the idea that the Big Issue is doing anything nefarious or harmful in adding to a problem which is not of its making.”
A DWP spokesman said the department had already taken action to stop immigrants using the loophole.
“We recognise that this was a loophole that was abused and that’s why, this March, we introduced the minimum earnings threshold of £153 per week.”