It will be further scrutinised by MPs and peers before it can become law, but the Government has said it wants to ditch the two-child limit from April.

The policy currently restricts child tax credit and universal credit (UC) to the first two children in most households, and campaigners have argued 109 children across the UK are pulled into poverty by the policy every day.

The change, if the Bill passes into law, would mean families can receive the child element of UC for all children, regardless of family size.

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Work and Pensions Secretary Pat McFadden said the benefit cap had seen children used as pawns for almost a decade.

He told MPs: “It (the policy) was never really about welfare reform, nor was it even about saving money.

“No, this was always first and foremost a political exercise, an attempt to set a trap for opponents, with children used as the pawns in the exercise.

“This was all about the politics of dividing lines, dividing lines between so-called shirkers and strivers, between the old distinction of the deserving and undeserving poor.”

Labour had faced calls to scrap the policy since it came to power in summer 2024, but cited spending controls as a reason for not being able to ditch it immediately – indicating there would be no change without economic growth.

Seven Labour MPs were suspended by the party after backing an SNP motion to scrap the welfare measure in a vote in Parliament that year.

Following repeated calls from charities, campaigners and many of the party’s own MPs, Chancellor Rachel Reeves announced in the autumn budget last year that the Government would move to scrap the policy from April.

The Conservatives have previously said they would re-instate the policy if they came back into power, with shadow work and pensions secretary Helen Whately telling the Commons many families are “doing the maths” of whether they should have another child.

She said: “Why should people on benefits get to avoid the hard choices faced by everyone else?”

Echoing this, her party colleague, Conservative former deputy prime minister Sir Oliver Dowden, defended the policy as having had a “principle” behind it “which is, will people take responsibility for their own actions?”

He added: “Because there are thousands, millions of people who choose not to have more children because they want to take responsibility for their lives and they don’t want the state to take responsibility.

“And yet now with this change, the Government is saying to those people, not only will the state take responsibility, you as the individual will have to pay for it through higher taxes.”

Reform UK leader Nigel Farage previously said his party would abolish the policy, but later clarified that would only be for families where both parents were British and working full-time. Last month, he said his party’s MPs would vote against getting rid of the limit.