Benefit claimants will have to report for work in local factories or undertake community work in return for payments, David Cameron will say next week.

The Conservative leader will also insist that those who refuse to take available jobs should have their payments stopped in a bid to drive down Britain’s welfare rolls.

But he has decided against adopting the toughest elements of US “workfare” schemes and will stop short of limiting the time the jobless are entitled to draw benefit, The Times has learnt.

The Conservative proposals are understood to particularly target the 2.6 million who claim Incapacity Benefit in Britain. They are expected to propose workfare schemes run by charity and other voluntary schemes that tie payments to constructive activity.

“We will expect people to take part in welfare to work programmes. We will expect people to take a job if there is a reasonable option available. If they won’t, then the state cannot be expected to simply continue to support them through benefit payments," Chris Grayling, the Welfare Secretary said recently.

The party's "green paper" on welfare reform, to be unveiled next week, will build on proposals from the party's social justice policy group, led by former leader Iain Duncan Smith. Mr Cameron endorsed its call for tougher conditions on benefit claimants at the party conference in October saying it was time for a “tough love” approach.

That report proposed grading all benefit claimants into four categories according to their ability to work. The most able would be obliged to work in the “active labour market or work readiness and community schemes as required” to receive cash. Many currently on Incapacity Benefit and lone parents whose youngest child is at primary school would be made to take part in workfare schemes for at least 20 hours a week under the proposed reform.

Even lone parents whose children are younger than five should be asked to spend between 5 and 10 hours getting ready for work and be available to do voluntary activity.

The issue of welfare reform has emerged as a key political battleground in recent months. Gordon Brown sought to seize the initiative earlier this week proposing cash bonuses for the long-term unemployed and lone parents to take back-to-work training.

Peter Hain, the Welfare Secretary, has accused Mr Cameron of “dog-whistling to the right's prejudices” in adopting US-style workfare policies. Ministers are also preparing to criticise the Conservative proposals as both expensive to set up and ineffective.

The Government also insists that sanctions already exist to stop payments of Job Seekers’ Allowance to those who unreasonably turn down work.

However Mr Cameron faces criticism for not being radical enough by Frank Field, the former welfare minister and Labour MP for Bikenhead, who said that time-limiting benefits was an essential step in reforming the system.

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