Incapacity benefit will be axed within four years under plans to crack down on the workshy.
All 2.5million claimants will be removed from the scheme by 2014, Chris Grayling said yesterday.
The work and pensions minister told MPs they will be moved on to other benefits, where they will be under stricter requirements to find work or be given greater support to do so.
Mr Grayling said tackling the handouts culture and offering more help to the most vulnerable would be a key priority. He revealed that the process of assessing whether incapacity benefit claimants are fit to work would begin next April.
During the general election, David Cameron pledged within three years to test every recipient on their ability to return to work.
The Conservatives believe that around 400,000 of the country's 2.6million incapacity benefit claimants are incorrectly claiming the handout and are able to take up employment.
However, experts say that this figure is a serious underestimate. Official figures suggest that only one in six adults claiming incapacity benefit may be entitled to do so.
That would mean that more than two million people could be receiving the £89-a-week payments without justification.
The handouts cost around £12.5billion a year. Department of Work and Pension sources confirmed that incapacity benefit would no longer exist 'in its current form' under plans to scrap Labour's myriad of benefit schemes.
The idea is to replace them with a single Work Programme offering support for the jobless.
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