Welfare “might need to be changed in certain important respects”, Nick Clegg said today following claims the Government is considering linking hikes in benefit payments to average pay rather than inflation.
The Deputy Prime Minister said the Coalition "may well need to reform welfare going into the future", but he stressed Britain's books would not be balanced on the "backs of the poor".
The automatic uprating could be axed and welfare payments frozen for two years, with any increases then linked to average pay, according to BBC Newsnight.
A Department for Work and Pensions (DWP) spokeswoman earlier said any changes to how benefits hikes are calculated will be looked at by the Government later this year.
She said: "Uprating of benefits will be considered by the Secretary of State and Chancellor as usual later this year."
Speaking today on the issue during a visit to a youth club in Westminster to announce the Government's plans to widen the definition of domestic abuse, Mr Clegg said: "The Coalition agreement is very clear, the Coalition Government's commitment is very clear, is that we are not going to fix the books, we are not going to balance the books on the backs of the poor, but the broadest shoulders need to take the greatest strain in doing that.
"That's why of course we may well need to reform welfare going into the future, welfare is something that is a huge item of Government expenditure and it might need to be changed in certain important respects, but that's got to be part of a wider approach, which says, look the people at the top have got to a make significant and bigger contribution as we fill the black hole in the public finances which were left to us by the last Government."
The benefit claims come as Work and Pensions Secretary Iain Duncan Smith insisted shifting to monthly benefit payments would help the poorest and dismissed claims the move will push low-income families into debt.
He told MPs the new Universal Credit had been designed for the majority but would also help longer-term claimants by weaning them off fortnightly payments before they return to work.
Under the Universal Credit there will be one single monthly benefit payment - rather than weekly or fortnightly as at present - and social tenants will have to pay landlords themselves.
Prime Minister David Cameron's official spokesman previously said that the decision on whether to uprate benefit payments in line with inflation was made on an annual basis.
"Benefit levels are reviewed every year and what normally happens is that there is an announcement, usually in December, setting out the benefit levels for the following year," said the spokesman.