EU referendum: Britain's lowest paid workers could be stripped of tax credits under latest plans to cut EU migration

Controversial plan would exclude in-work benefits only to EU workers earning the minimum wage - including Brits

Angela Merkel and David Cameron at Chequers in October (Getty Images)

Britain’s lowest paid workers could be stripped of tax credits under controversial plans Angela Merkel has reportedly offered to David Cameron as part of his efforts to reform the UK’s membership of the European Union.

With the Prime Minister struggling to win support for his plan to reduce immigration by barring EU migrants from claiming in-work benefits for four years, the German Chancellor is offering him a concession that would strip migrants of tax credits but only if they are earning the minimum wage, according to the Daily Mail.

But to ensure the rules are not discriminatory, they would also have to apply to British workers on the minimum wage too.

The plan was dismissed as “nonsense” by Tory eurosceptics, who said the plan would have no impact on the ultimate aim of reducing net migration to the UK at the same time as hitting the poorest households in the UK.

Other reports suggest Ms Merkel is suggesting a plan to tighten the criteria over who is entitled to claim in-work benefits under freedom of movement rules.

European Commission president Jean Claude Juncker said on Friday that he was confident a deal with Mr Cameron would be reached at the next Brussels summit in February, paving the way for a summer referendum in either June or July.

It comes as George Osborne ruled out a second referendum – a plan first suggested by his Tory leadership rival Boris Johnson – saying the upcoming vote was a “once in a lifetime” decision.

“There’s no second vote. This is the crucial decision of our lifetimes,” he told BBC Newsnight.

Dominic Cummings, a former Tory Cabinet adviser, immediately accused him of trying to “scare” voters into voting to remain in the EU.

Jonathan Faull, the head of the European Commission's British referendum task force, said on Thursday there was a "very good prospect" of Mr Cameron securing a comprehensive EU renegotiation deal "rather soon".