Ministers claim the reforms will address what they call “perverse incentives” that, in their view, have encouraged people to remain on benefits without getting proper help to move into employment.

From Monday, new applicants for the health component of universal credit (UC) will receive a lower rate of £217.26 a month.

Universal credit is a benefit to help with living costs, available both to people in low-paid work and to those who are unemployed or unable to work.

People with the most severe, lifelong conditions, people nearing the end of life, and all existing UC health claimants will continue to receive the higher monthly rate of £429.80.

The change will save taxpayers around £1 billion, the Government has said.

Statistics published last month showed there were 2.7 million people on UC assessed as having limited capability for work and work-related activity (LCWRA) across England, Scotland and Wales.

People in this category are not required to undertake any interviews or work-related activity.

The Government has pledged that its investment in tailored employment support can offer people opportunities, supporting them to move into and stay in work “rather than leave people stuck on benefits”.

Also this week, the standard rate of UC will be boosted, in what ministers have said is an effort to “bear down on the cost of living”.

It said this will result in almost four million households on the standard rate of UC getting around £295 extra this year in cash terms.

Social security and disability minister Sir Stephen Timms said: “The welfare system we inherited has for too long locked disabled people and people with long-term conditions out of work.

“Laws coming into force today will change that, reducing projected expenditure on universal credit by almost £1 billion.

“Simultaneously boosting the standard allowance and investing £3.5 billion in employment support means we’re creating a welfare system that backs people to work and helps them build a better future.”

Last year, ministers were forced to climb down on plans to also reform disability benefits, including for those with mental health conditions, in the face of backbench Labour opposition.

Instead of immediate reform, the Timms review is seeking views on personal independence payment (PIP) and how it works.

Ministers have promised that any changes to the benefit, which helps with extra living costs for people who have a long-term physical or mental health condition or disability and difficulty doing certain daily tasks or with mobility because of their condition, have been postponed until after that takes place.

The review is expected to report to Work and Pensions Secretary Pat McFadden by autumn, with the Government stating that an interim update will come ahead of that.