Nick Clegg has defended the 1% benefits cap as he faced opposition from some of his own MPs ahead of a Commons vote on the move.
The Deputy Prime Minister reacted angrily when Labour’s Harriet Harman warned the cap would make “millions of families worse off”.
Mr Clegg admitted it would hit “people both in and out of work” but insisted it was essential to make savings.
“The challenge for her and her party is firstly to explain in this house and to the British people why she can support a 1% pay limit to doctors, nurses and teachers in the public sector and not back this approach,” he said.
“And where is she going to find the £5bn that the measures are going to save in the next three years?”
At least two Lib Dem MPs, including a former Government minister, have vowed to rebel in the vote on severing the link between benefits and inflation later.
Another has warned that a “large number” are against the measure, which will see a real-terms cut in most working age welfare payments and tax credits.
Ministers say the cap is needed because it is unfair that state handouts have been rising twice as fast as wages during recent years of austerity.
Labour opposes the legislation, pointing to analysis showing seven million working households will lose out by an average £165 per year.
Shadow chancellor Ed Balls said: “While millionaires get a tax cut, seven million striving working families are paying the price for David Cameron and George Osborne’s economic failure.
“The best way to get the benefits bill down is to get the economy growing and people back to work, not hit striving families.”
The Opposition has now tabled an amendment calling for the Bill not to get a second reading and pushing its own plan for a compulsory jobs guarantee for the long-term unemployed.
Work and Pensions Secretary Iain Duncan Smith condemned its stance as “pathetic”, “unrealistic” and “ridiculous”.
“We have to still continue to try and tackle the deficit left for us by Labour which is fuelling huge borrowing and will cost taxpayers enormously unless we get it under control,” he said.
“It is also about trying to do it in a way that is fair to those who are in work and are paying the taxes for those who are on welfare.
“The reality is they have seen their welfare payments rise far faster over the last six or seven years than anybody in work.”
Labour was “a pathetic opportunistic group who spend their time trying to pretend to people there are soft options out there”, he added.
Anti-poverty campaigners have warned that families will increasingly struggle to properly feed children if benefits fail to keep pace with rises in the cost of living.
Former children’s minister Sarah Teather has already broken ranks, warning the the measure would make poverty “significantly worse” and accusing Mr Osborne of “playground politics”.
She has now been joined by South Manchester Liberal Democrat MP John Leech, who said the found the Tories’ language “objectionable”.
“I strongly support raising the tax threshold for low paid workers, but this cut will wipe out much of that good work,” he said ahead of this evening’s Second Reading division.
Meanwhile, the Tories are trying to distance themselves from the “skivers against strivers” rhetoric sparked by Mr Osborne’s original announcement.
Conservative MP Sarah Wollaston insisted that the “vast majority” of her party did not use those terms and it was not how they “feel generally”.
The respected Institute for Fiscal Studies (IFS) has estimated seven million working families will be £165 worse off a year, compared to £215 for the 2.5 million workless households.
Mr Duncan Smith says the £165 figures only reflects the benefits cap and claims working families will actually be £125 better off each year due to the rise in the income tax threshold.