Deputy Prime Minister Nick Clegg has denied that large cities will be "cleansed" of poor people following cuts to housing benefits.
Mr Clegg said the suggestion, made by Labour's Chris Bryant, was "deeply offensive to people who have witnessed ethnic cleansing".
Mr Bryant told MPs that capping housing benefit at £400 a week would force 200,000 people from urban areas.
The coalition risked "turning London into Paris", he said.
The French capital was the scene of large-scale suburban riots during 2005, following the deaths of two youths from immigrant families.
The angry exchanges between Mr Clegg and Mr Bryant took place during deputy prime minister's questions in the House of Commons.
Mr Bryant, the shadow justice minister, said: "It's estimated that 200,000 people will be forced out of major metropolitan areas as a result of the government's niggardly proposals on welfare reform, which will turn London into Paris, with the poor consigned to the outer ring."
These people would be "socially engineered and sociologically cleansed out of London".
Mr Clegg replied: "We all indulge in a bit of hyperbole but I have to say to him quite seriously to refer to 'cleansing' would be deeply offensive to people who have witnessed ethnic cleansing in other parts of the world.
"It is an outrageous way of describing [the situation]."
He added: "What we are saying is that, for people who receive housing benefit, it is perfectly reasonable for the government to say that it won't hand out more in housing benefit than people who go out to work, pay their taxes, play by the rules will do when they look for housing themselves.
"We are simply suggesting there should be a cap for family homes of four bedrooms of £400 a week. That is £21,000 a year.
"Does he really think it's wrong for people who can't afford to live privately in those areas that the state should subsidise people to the tune of more than £21,000? I don't think so."
Meanwhile, Liberal Democrat deputy leader Simon Hughes has held talks with Mr Clegg over the coalition's benefits cuts, which he has described as "draconian" and vowed to try and block in Parliament.
Mr Hughes is believed to be concerned about three policies in particular - a cut of 10% in housing benefit after one year for those on Jobseeker's Allowance, the cap on housing benefit for private rented homes, and allowing housing associations to charge rent at close to the full market rate.
Torbay MP Adrian Sanders and Carshalton and Wallington MP Tom Brake have also spoken out against the plans, as a threatened backbench rebellion grows.
Mr Brake told BBC News on Monday: "My concern is that the changes on housing benefit, particularly in London, are going to have a really hard-hitting impact on a number of families."
In an attempt to head off a full-scale rebellion, Lib Dem housing minister Andrew Stunnell has insisted the changes will create more social housing than was ever achieved by the previous Labour government.
He said most of what had been written about the government's plans was "inaccurate".
The coalition has argued that the new higher rental income from social housing will encourage the private sector to invest.