More details are slowly coming to light on how the government will cut a further £12bn from the welfare bill.

The Sunday Times reports that Work and Pensions Secretary, Iain Duncan Smith, has ordered civil servants to draw up plans for further cuts to child benefit and housing benefit.

One of the options being considered is limiting child benefit to no more than two children, saving an estimated £1bn a year for the Treasury. The move would affect both working and non-working parents.

Treasury officials are said to prefer a mildly less arbitrary child benefit cap of three children.

Another option being considered is to reduce child benefit for the first child from £20.70 a week to £13.70, saving £2.5bn annually. Affected households would lose £360 a year, reports the Scotsman.

It’s possible that both policies could be implemented simultaneously.

A Tory spokesperson told the media in the run up to the general election that the Conservative Party “won’t cut child benefit” over the course of this parliament. A statement which could now turn out to be a broken promise.

It has been reported that Iain Duncan Smith will attempt to sell the policy to the public as ‘changing the behaviour of the working poor’.

Labours Shadow Secretary of State for Work and Pensions, Rachel Reeves said:

“For months Tory ministers have refused to rule out cutting child benefit and tax credits to fill the £12billion black hole in the welfare budget.

“And today we’ve learnt that Iain Duncan Smith has ordered civil servants to draw up plans to cut child benefit which would mean millions of working families losing out.

“David Cameron and George Osborne must come clean with the public about their plans to cut child benefit and child tax credits.”

Research published earlier this month (May) warned that the government’s decision not to raise children’s benefits has resulted in more than two million families cutting back on food or heating.

The analysis by the End Child Poverty coalition reveals that one in five families across the country are struggling to provide their children with the basic necessities of life, with the majority of these children coming from low-income working families.

The coalition is calling on the government to increase child benefits in line with the cost of living, for at least the next two years. This would result in 310,000 fewer children living in absolute poverty by 2020, says the coalition.

David Holmes CBE, Chair of End Child Poverty, said: “It is deeply worrying that parents are having to cut back on food, heating and other essentials that their children need in order to develop and thrive.”

He added: “During the election campaign David Cameron promised not to cut Child Benefit, now is the time for him to keep that pledge.

“We think it is vital that child benefits keep pace with the cost of living and that the Government gives them the same protection as the state pension. This is an opportunity to be bold and to invest in our children’s future.”

UPDATE: Downing Street Rejects Iain Duncan Smith Plan For New Limit On Child Benefit