Camden LBC is set to move up to 200 low-income families out of capital to as far a field as Bradford, Leicester and Birmingham, claiming it can no longer afford to house them.

The local authority has announced that the Government's welfare benefits cap means poorer families could not afford to live in the area and also blamed a lack of available housing and high private rents.

The north London council said it would contact 761 households - 2,817 people - who may be affected by the Government's benefit cap, which will limit total welfare payments to £500-a-week for families from later this year.

The Government already limited housing allowances in April 2011 and will roll out further nationwide benefit caps from September this year under Universal Credit.

Cllr Sarah Hayward, leader of Camden Council, said: ‘We are deeply concerned with the continued cuts to welfare benefits and how this will impact on Camden.

‘The very high housing costs in Camden and across London mean that low-income households will find it increasingly hard to find affordable accommodation if they are not in social housing.

‘Sadly however, the scale of the cuts, high private rental costs and lack of available housing in Camden will mean that more people will soon have to consider moving from the borough and in some cases London entirely.’

The council said the majority of these families had three children and would need to find on average an additional £91 a week for rent.

A spokesman for the Department for Work and Pensions said: ‘It's not right that benefit claimants can receive higher incomes than families who are in work.

‘That's why we're introducing a cap on benefits - to restore fairness back into our welfare system while ensuring that support goes to those who need it.

‘Local authorities must consider the individual circumstances of the household and they must absolutely not apply a blanket policy of moving homeless families to different districts.’