Coalition welfare reforms are causing 'severe financial hardship and distress' to vulnerable people who are unable to adapt, MPs have warned.

A report from the Commons Work and Pensions Select Committee today warned measures designed to cut down on housing costs were affecting disabled people who 'were not the intended targets of the reforms and are not able to respond by moving house of finding a job'.

Ministers were urged to exempt disabled people or those living in heavily adapted housing from the Social Sector Size Criteria (SSC) - more commonly referred to as the 'bedroom tax'.

'Using housing stock more efficiently and reducing overcrowding are understandable goals,' Committee chair, Dame Ann Begg, said.

'But 60-70% of households in England affected by the SSSC contain somebody with a disability and many of these people will not be able to move home easily due to their disability. So they have to remain in their homes with no option but to have their housing benefit reduced.'

The cap on household benefit being handed down to tenants in temporary accommodation is forcing local authorities to pick up the shortfall between rent and welfare support, resulting in 'no overall saving to public funds' - the report claims.

MPs called for councils to be given greater certainty about the availability of funding they can award to residents facing hardship 'for at least the next three years'.

However Begg added that Discretionary Housing Payments (DHPs) were only a 'temporary solution', with the size of awards remaining 'heavily dependent' on the local area.

Responding to the report, chief executive of homeless charity Crisis, Leslie Morphy, said that without 'prompt action' on housing benefit, the Government risked 'driving homelessness still higher'.

However, a Department of Work and Pensions spokesperson said the reforms were 'necessary to restore fairness to the system and make a better use of social housing'.

'We have given councils £345m since reforms came in last year to support vulnerable groups, especially disabled people,' they added. 'The removal of the spare room subsidy means we still pay the majority of most claimants' rent. But we are saving the taxpayer £1m a day which was being paid for extra bedrooms and are freeing up bigger homes for people forced to live in cramped, overcrowded accommodation.'