Wayne Blackburn was born unlucky – his mother's umbilical cord got wrapped around his neck, starving his brain of oxygen. Now his legs don't work.

"Imagine the worst cramp you've ever had," he says. "That's in both my legs 24/7 … I literally walk a few steps and I'm in agony."

Blackburn, 36 has degenerative spastic diplegia, a type of cerebral palsy. He knows he will have a good day when he gets four hours of sleep. On a bad night he screams in pain and between the tears he hardly sleeps at all.

He's no scrounger, he says. Until 2009, Blackburn, from Nelson, Lancashire, was in work. After marrying his girlfriend he wanted to provide for her so he took a job in retail that involved being on his feet.

"For a time I was quite successful at it," he says. "[But] it made me a lot worse. I did that for just under two years." Though he would like to return to a job, Blackburn says he is in the worst physical condition he has ever been and is permanently dosed on multiple painkillers.

Without any physical examination, Blackburn says, the Department for Work and Pensions put him on employment support allowance (ESA) and in the work-related activity group (WRAG), for those soon to be back in employment.

Like tens of thousands of others in the WRAG, Blackburn feels that the assessment process is desperately flawed and that he should not have been put into that group because there is no way he can take a job at this time.

Despite this, in just a few days, Blackburn may be forced to work without pay whether he likes it or not.

On Monday, the government will allow private back-to-work companies and jobcentre case managers to force Blackburn and more than 300,000 sick and disabled welfare claimants into unpaid work experience for an unspecified length of time.

Also from that day – the UN's international day of persons with disabilities – if those in WRAG who have illnesses ranging from cancer to paralysis to mental health issues do not comply with such instructions, they can be stripped of up to 70% of their benefits and forced to live on £28.15 a week.

According to the latest figures, between 1 June 2011 and 31 May 2012 there were 11,130 conditionality sanctions applied to ESA WRAG claimants. The average length of such sanction is seven weeks.

Blackburn says he is now "petrified". "They could call me in on Monday and say 'right, you've got do to this, this and this'. And if I don't, they can sanction me and that scares me … it makes me so nervous, it makes me physically sick."

Mandatory work exists for those who are not sick. Tens of thousands of unemployed people have passed through four weeks' unpaid placements on the mandatory work activity (MWA) scheme.

More have passed through the work programme, which this week was found to have utterly failed to meet its benchmark targets to get the long-term unemployed back to lasting employment.

The MWA scheme also does not work. The DWP's most recent study is clear about its efficacy: it has zero effect on increasing people's chances of getting a job. Nevertheless, the idea of forcing those on benefits to undertake weeks and months of unpaid work has spread. In August the London mayor, Boris Johnson, announced he was using European social fund money to force 18- to 24-year-olds to commit themselves to 13 weeks of unpaid work.

A few weeks ago Derbyshire job centres said they would be making their 18-24 year olds work for six months unpaid as a condition of their benefits.

Leaked this week, the DWP memo that permits those who are sick and disabled to also be forced into unpaid work is clear: "It has now been agreed work programme providers will be able to use mandatory work placements as another measure through which to help ESA WRAG participants move closer to the labour market.

"If a work programme provider identifies a suitable participant and ensures the work placement is of community benefit, they can mandate them in the usual way."

The DWP confirmed with the Guardian that the work placements do not have any time limit.

The phrase "for community benefit" is oblique; since February the DWP has stopped answering freedom of information requests about where people are being sent to work – even when instructed to do so by the information commissioner – because it fears the MWA scheme will collapse under the weight of public protest if details are released.

Under further questions from the Guardian the DWP has admitted that although placements are meant to be for community benefit, private, profit-seeking companies can participate in the scheme.

The DWP said: "Although the department does not rule out the possibility that placements in the private sector could meet the requirement for placements to be of benefit to the local community, it is likely that the majority of mandatory work activity placements will be outside the private sector."

Ingeus Deloitte and Seetec, two of the larger companies involved in administering MWA, have refused to comment on whether they are forcing unemployed people to work for private companies but said they abided by the "community benefit" rule.

This month, one of the biggest charities known to be involved in MWA, the British Heart foundation, said that it was pulling out of the programme. The charity said it was offered cash incentives by private companies running the programme if it took on jobseekers. The BHF refused such payments, as it would have meant the charity being paid while its volunteers – in desperate need of a job – worked for no pay in return.

"Our involvement in work programme schemes has always been about finding people who want to work in our shops, rather than providing a source of income for the charity. As such, we tell BHF staff to decline payments from agencies" Retail Director, Mike Taylor, said.

Ingeus and Seetec said they did not offer inducements to organisations for taking on unpaid jobseekers.

The DWP said it was not troubled by this practice: "We pay providers to find us placements, it's up to them what arrangement they make with organisations who will take someone on."

The new policy of involving sick and disabled people in mandatory work activity has raised similar concerns at Cancer Research UK, which is also pulling out of mandatory schemes from the new year. "We have made the decision to no longer offer any ad hoc local arrangements for anyone on the mandatory work activity placement scheme from 1 January 2013," said Simon Ledsham, director of trading.

The disability charity Scope, which has taken on unemployed people on mandatory placements under a set of internal practices, is now urgently reviewing its involvement and may also pull out.

"People that do work experience in our shops tell us they really value the chance to learn retail and customer service skills, build confidence and get used to being in a working environment," said chief executive Richard Hawkes.

"But these developments raise some very serious questions about providing work experience placements for people who have to undertake the activity as part of the Government's back-to-work scheme.

"We are carrying out an urgent review into whether it remains the right thing for us to do to offer work experience in this particular context."

Shadow employment minister, Labour's Stephen Timms also told the Guardian that the new policy of mandatory placements was "a recipe for disaster".

"We know that a large group of people declared to be capable of returning to work are in fact not. Forcing them into mandatory jobs is a recipe for disaster." Timms said

"Ministers need to focus first on fast and fundamental reform, and to get the basics right."

Explaining the policy, employment minister Mark Hoban said: "Some people on sickness benefits haven't worked for a long time or may not have had many jobs, which will make it harder for them to find work in the future.

"Work experience is a very good way to increase someone's confidence and get them ready for their move into a job when they are well enough."

The minister added: "People on sickness benefits who do all they can to improve their chances of moving back into a job have nothing to worry about.

"They will get their benefits and we will do all we can to help. But in the small number of cases where people refuse to stick to their part of the bargain, it's only right there are consequences."