Ministers are considering forcing all housing benefit recipients to contribute towards their rent as part of efforts to save £12bn from the welfare bill, government sources say.
Housing benefit currently can cover the full cost of rent.
The chancellor is also understood to be pushing for the cap on all benefits to be lowered from £26,000 to £20,000 outside London and south-east England.
It was previously announced the cap would be cut to £23,000 across the UK.
It is understood that other proposals to abolish or severely restrict the carer’s allowance have been dropped after opposition from the prime minister.
A government spokesman said it would not comment on speculation about next Wednesday’s Budget.
Since winning the election, officials and ministers have struggled to find £12bn in savings – a key Conservative manifesto commitment.