Thousands of Britain's biggest jobless families are in line for five-figure windfalls from the taxpayer under Labour's plans to scrap the two-child benefit cap.

Keir Starmer has all but confirmed the cap will be lifted in this month's Budget yesterday as he seeks to shore up his faltering leadership against a challenge from the Left.

The Treasury had drawn up plans to 'taper' the payments to prevent huge handouts to the biggest families currently affected by the cap.

But, following a Labour backlash, ministers have now decided to abolish the cap in full at a cost of £3.5billion a year.

Critics of the cap claim it has worsened child poverty. But analysis of official figures shows that ditching it would hand thousands of pounds a year in extra benefits to almost 200,000 large families in which no one goes out to work.

Figures suggest the move could result in the largest affected families qualifying for more than £10,000 a year in additional benefits.

Shadow welfare secretary Helen Whately said it was 'deeply unfair' to ask taxpayers to fund big handouts to large families on the dole.

'This will cost billions and be paid for by the taxpayer,' she said. 'We must question what ministers are thinking.

'It's wrong to make hard-up households pay even more in tax to fund people on benefits having huge families. Keir Starmer should get a backbone and stand up to his Left-wing backbenchers rather than picking the pockets of hardworking families again.'

Former work and pensions secretary Esther McVey said it was 'financially and morally irresponsible' to encourage people to have children they cannot afford to raise.

The benefit cap limits means-tested benefits like universal credit and child tax credit payments to the first two children, costing families a typical £3,455 in lost benefits for each additional child.

The Institute for Fiscal Studies has estimated the cap costs affected families an average of £4,300 each.

Figures produced by the Department for Work and Pensions (DWP) show that 470,000 families are now affected by the policy.

Almost two-thirds (297,000) have three children, while a quarter (117,000) have four. A further 37,000 affected families have five children, while 18,260 are listed as having 'six or more'.

The DWP does not provide a breakdown of the largest families. But separate figures held by HM Revenue and Customs show that child benefit, which is not subject to the cap, was paid to more than 16,000 families with six children, more than 5,000 with seven children and even to 15 families with 13 children or more.

In theory, an affected family with five children would qualify for additional benefits worth around £10,000 a year if the cap is lifted.

The total benefits received by a family is covered by a separate 'benefits cap' of £25,320 in London and £22,020 outside – although Labour MPs are also pushing to lift this.

The Prime Minister yesterday dropped the heaviest hint yet that the cap will be lifted in the November 26 Budget.

He told ITV's Lorraine programme: 'I can tell you in no uncertain terms I'm determined to drive child poverty down.

'It is what the last Labour government did, and it's one of the things we were proudest of.

'I am personally determined that is what we are going to do.

'You won't have to wait much longer to see what the measures are.'

Asked whether that would involve axing the two-child benefit cap, the PM said: 'I wouldn't be telling you that we're going to drive down child poverty if I wasn't clear that we will be taking a number of measures in order to do so.'

Sir Keir and Rachel Reeves initially resisted lifting the cap on cost grounds. Seven Labour MPs were suspended from the party last year after voting to end it.

But the Government's position has softened amid fears that Sir Keir could face a coup from MPs on the party's so-called 'soft left'.

Former Labour MP Rosie Duffield, who quit the party over the issue last year and now sits as an independent, accused Sir Keir of 'a desperate reaction to the polls, not a conviction or belief, or an apology to us for being threatened for fighting child poverty'.

The two-child cap was introduced by the Conservatives in 2017 and Kemi Badenoch has committed to reintroducing it if it is scrapped.

Nigel Farage has recently rowed back on a commitment to abolish the cap, saying Reform would now only lift it for families in work.