Welfare claimants could receive benefits on a pre-paid card to curb spending on ‘destructive habits’, work and pensions secretary Iain Duncan Smith has announced.

The Government was today accused of stigmatising claimants after announcing plans to block spending on alcohol, cigarettes or gambling.

Speaking at the Conservative Party Conference in Birmingham, Smith said the measure would provide support for ‘families on the margins’.

‘I have long believed that where parents have fallen into a damaging spiral – drug or alcohol addiction, even problem debt, or more – we need to find ways to safeguard them – and more importantly, their families, their children, ensuring their basic needs are met,’ he said.

‘That means benefits paid should go to support the wellbeing of their families, not to feed their destructive habits.

‘I am testing prepaid cards, onto which we will make benefit payments, so that the money they receive is spent on the needs of the family – finally helping break the cycle of poverty for families on the margins, change we can be proud of.

‘In all of this, our undertaking is hardly a small task – indeed, the easy option would have been to paper over the problem opting instead for a sticking plaster or another patch-up job. Yet I believe the biggest mistake would be, in the pursuit of short-term gain, not to see this task through.’

Responding to the speech, chief executive of single parent’s charity Gingerline, Fiona Weir, warned the scheme ‘capitalises on and reinforces negative stereotypes of people who need support from benefits’.

‘Single parents, both in and out of work tell us they are struggling financially, but budgeting isn’t the problem: low wages, benefit cuts and rising costs of the essentials are,’ she told the Independent.