George Osborne will slow the pace of planned welfare cuts when he presents his Budget, the BBC understands.
The chancellor is set to take three years – instead of two – to cut welfare spending by £12bn a year.
Measures restricting tax credits for families with more than two children are anticipated.
The first all-Conservative Budget since 1996 is also likely to cover Sunday trading, inheritance tax and social housing and to raise tax allowances.
Mr Osborne said the Budget would put “economic security first”.
Measures expected to be in the Budget – which Mr Osborne will deliver at 12:30 BST – include:
- An increase in the inheritance tax threshold to £1m for married couples by 2017
- A lower benefit cap of £23,000 in London and “lower than that in the rest of the country”
- Making local authority and housing association tenants in England who earn more than £30,000 – or £40,000 in London – pay up to the market rent
- Maintenance grants for students – paid to students with family incomes below £42,000 – to be scrapped and converted into loans
- The BBC covering the cost of providing free television licences for over-75s
- Allowing councils in England and Wales to relax Sunday trading laws
It is understood there will be a rise in the amount of money people can earn before paying any tax, while the threshold for the 40p tax rate will also be raised.
The cabinet has been briefed on the Budget’s contents, in a meeting that lasted almost one and a half hours.
Before Mr Osborne gets to his feet in the Commons later, David Cameron will hold his weekly Prime Minister’s Questions session with MPs, at noon.
Ahead of the Budget statement, acting Labour leader Harriet Harman said the economy needed to be strengthened “but not at the expense of people being made worse off”.
Mr Osborne is set to promise “bold” policies that will “secure Britain’s future”, when he addresses the House of Commons later.
The Tories have not yet said where the bulk of the £12bn in welfare savings they have pledged to make will come from.
BBC political editor Nick Robinson said Mr Osborne would reveal the detail of the cuts, which would be phased in, with £8bn by 2017/8 and a further £4bn by 2018/9.