The government is planning to reduce the annual welfare bill by a further £4bn, Chancellor George Osborne has told the BBC.
He will give details of the savings, which follow an £11bn cut made in June, in October’s spending review.
The Treasury says the targets for the reductions are still being discussed.
But Mr Osborne told BBC political editor Nick Robinson that those making a “lifestyle choice to just sit on out-of-work benefits” would be affected.
He described the welfare budget as “completely out of control”.
The combined £4bn and £11bn cuts represent about 6% of total spending in the area.
The BBC understands that discussions are continuing in Whitehall about whether it is possible to limit pensioner benefits – such as the winter fuel allowance, bus pass and free TV licence – without breaking Prime Minister David Cameron’s election promise that he would preserve them.
The Conservatives have described as “lies” Labour’s warnings that those benefits would be scrapped.
The Treasury is currently holding meetings with individual ministers ahead of the October’s spending review, likely to be the toughest in a generation.
Most government departments have been told to prepare packages of cuts worth between 25% and 40%.
Earlier, Deputy Prime Minister Nick Clegg said there were “difficult decisions” ahead, but the savings would begin in April 2011 and be “spread evenly” over the next four years – equivalent to an annual 6% budget reduction.
For Labour, shadow business secretary Pat McFadden accused the coalition of taking a “gamble with growth and jobs” and said cuts would “hit the poorest areas hardest”.
BBC-commissioned research suggests industrial areas in the North East and Midlands are least resilient to such changes.
Middlesbrough is ranked as the most vulnerable to cuts, followed by Mansfield in Nottinghamshire and Stoke-on-Trent.
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