Ministers are considering drastically cutting the main Employment and Support Allowance sickness benefit, internal documents seen by the BBC suggest.
New claimants, judged to be capable of work with appropriate support, could be given just 50p more per week than people on job seekers allowance.
Current recipients get almost £30 per week more.
The Department for Work and Pensions said the ESA proposals were not government policy.
The papers reveal that the government has also been forced to hire extra staff to clear the backlog on the benefit.
Some 100 healthcare professionals are being hired to carry out fitness-for-work tests. The staff, who will be employed through the Pertemps agency, will help to reduce a backlog of more than 600,000 cases.
They will be in addition to any extra staff brought in when a new contractor is announced shortly to replace ATOS. The BBC understands that the American firm, Maximus, has been selected.
Leaked documents this summer showed that ministers considered ESA - formerly known as incapacity benefit - to be "one of the largest fiscal risks currently facing the government".
They also revealed concerns about claimants moving off jobseekers allowance onto ESA.
Giving consideration to cutting the differential paid to ESA recipients in the Work Related Activity Group (WRAG) - individuals who have to prepare for employment - is a reflection of that concern.
They currently get £28.75 more per week but the documents show plans are being discussed to cut that to just 50p more than jobseekers allowance. People receiving JSA, who are aged 25 or over, currently get £72.40 per week.
Employment and Support Allowance is paid to approximately two million people. Claimants have to undergo a work capability assessment to determine whether they are eligible and at what level.
Labour MP Dame Anne Begg, who chairs the Commons Work and Pensions Select Committee, said she would support overhauling the delivery of ESA but "did not envisage" any reduction in the value of the benefit.
"That's not reform, that is just saving money. I hope that is not something the government is going to come forward with."
Problems with the current provider, the French firm ATOS, which was appointed by the last Labour government, led to the firm reaching an agreement with the government earlier this year to leave its contract early.
Ministers raised concerns about the quality of assessments being carried out by ATOS which has led to a backlog of cases. The backlog is currently running at more than 600,000.
As ministers focus assessments on new claimants, recipients who should have been re-assessed under the terms of the benefit are not being seen, creating much of the backlog. Most of those receiving Incapacity Benefit, who should also have been assessed, are also not being tested.
The Office for Budget Responsibility said in a report earlier this month that "the backlog of applications encourages claimants previously not found eligible for ESA simply to reapply".
A spokesman for the DWP said "We are committed to supporting those people who are able to work to make the positive move into employment.
"The current work capability assessment contract was inherited from the previous government - and we have taken numerous steps to improve it. We will shortly announce a new provider. No one should doubt our commitment to ensuring that people who need an assessment get the best possible service and are seen in the quickest possible time."