Charities have expressed alarm at Government plans to slash the UK's welfare bill by £11 billion within four years.
The shake-up will see tax credits reduced for middle income families, child benefit frozen for three years and the introduction of a new medical assessment from 2013 for people claiming Disability Living Allowance.
All benefits, tax credits and public service pensions, except the state pension and pension credit, will be increased in line with consumer prices inflation, rather than retail prices inflation, from next year, saving around £6 billion annually by the end of this Parliament.
There will also be sweeping changes to housing benefit, saving £1.8 billion by 2014/2015, while the health in pregnancy grant will be abolished from next April and the Sure Start maternity grant will be restricted to the first child.
Lone parents will also be expected to look for work when their youngest child starts school.
George Osborne said total welfare spending had soared from £132 billion 10 years ago to £192 billion now, an increase of 45%.
He hopes the planned shake-up will save the country £11 billion by 2014/15.
But charities expressed concern that some of the most vulnerable people in society would be hit by the changes.
Richard Hawkes, chief executive of disability charity Scope, said: "The 2.9 million disabled people who receive Disability Living Allowance (DLA) will be alarmed by these changes.
"The proposal to introduce a new medical assessment for DLA appears designed purely to reduce the number of people eligible for this support."
Tax credits, which currently cost the UK £30 billion a year, will be one of the biggest areas for reform.
Mr Osborne said 150,000 families with incomes of more than £50,000 a year currently received money through them.
In a bid to save £3.22 billion by the end of this Parliament, a range of changes will be introduced, including reducing payments to families earning over £40,000 next year.
The taper rate at which awards are reduced will be increased, and the baby element will be removed for new children from April 2011, as will the one-off payment to new workers over 50 from April 2012.
But extra help will be given to low income families through an increase to the child tax credit of £150 above indexation next year, at a cost of £2 billion.
A Save the Children spokeswoman said: "The £2 billion extra cash to help the poorest families via child tax credit was the rabbit that Osborne pulled out of the hat.
"It's a welcome move and we're glad it's targeted at those who need it most.
"But we fear this benefit will be wiped out by Osborne's other tough measures."
The Chancellor also promised to put an end to the current housing benefit system, which sees some families claiming up to £104,000 a year, and costs the country £21 billion annually.
Instead a number of reforms will be introduced, including setting a maximum limit of £400 a week for a house with four or more bedrooms on the amount that can be claimed.
This move, combined with other changes to the benefit, will lead to savings of £1.8 billion a year by the end of this Parliament.
But housing charity Shelter, which has previously called for the benefit to be reformed, expressed concern that it could lead to more people facing shortfalls in their rent, forcing them into debt.
Campbell Robb, chief executive of Shelter, said: "The vast majority of housing benefit claimants are either pensioners, those with disabilities, people caring for a relative or hardworking people on low incomes, and only one in eight people who receive housing benefit is unemployed.
"We are really concerned that, even at current levels, nearly half of Local Housing Allowance claimants are already making up a shortfall of almost £100 a month to meet their rent."
Single parent charity Gingerbread said a family having a second child could be up to £1,200 a year worse off as a result of the cuts.
Gingerbread chief executive Fiona Weir said: "Having a baby puts the family finances under pressure. These cuts will really hit families with young children hard."
Imran Hussain, of Child Poverty Action Group, said: "This is a disappointing Budget for child poverty and increases the risk of the Government failing to meet its 2020 goal of ending child poverty.
"There are nearly four million children living in poverty. A Budget that fails to bring that number down is, at best, a do-nothing Budget not a progressive Budget.
"We do recognise some important targeting to the poorest families with the increase in the child element of the Child Tax Credit, but this seems largely to be neutralising the impact of other measures rather than making actual progress on child poverty."
© 2012 The Press Association Limited
