People on low incomes will suffer if cuts to their tax credits do not go ahead, George Osborne has insisted.

The Chancellor argued that reducing the payments to people in low paid jobs would give them “economic security” by reducing the Government’s spending deficit.

“Working people of this country want economic security, the worst possible thing you can do for those families is bust the public finances, have some welfare system this country can’t afford,” the told BBC Radio 4’s Today programme.

“That includes a tax credit bill that’s gone up from the £1bn when it was introduced to the £30bn today. They are the people who will suffer. It’s not about philosophy or theory: it’s about the practical economic security of the people of this country.

“That tax credit bill would go up and up and up, the country couldn’t afford it, people’s economic security would be undermined, and the people who would suffer would be the very lowest paid in our country – they would be the people who would ultimately lose their work.”

Labour says the richest should pay to cut the deficit, and has identified cuts to tax avoidance and corporate subsidies it says could replace cuts to the lowest paid.

Mr Osborne is facing disquiet from this own party over the cuts after research from the Institute for Fiscal Studies found the Government’s measures would leave people in work significantly worse off.

The Chancellor claims that increases in the minimum wage would make up for the cuts in most cases, but the IFS says the increase comes “nowhere near” to compensating for it.

The Institute also says the deepest welfare cuts planned by the Chancellor will hit people who have jobs.

The revelation is a blow to the Chancellor, who has repeatedly claimed his party represents “working people”.

David Cameron on Sunday also ruled out any changes to the tax credits cuts, telling the BBC that his plans were “right” and would leave people better off.

Mr Cameron effectively ruled out cutting the benefit before the election, telling a voters Question time that he “rejected” proposals to cut tax credits and did not want to do so.

The cuts are part of £12bn cuts to the social security budget that the Government is to make – specifics of which it refused to announce before the election.

Mr Osborne was interviewed in Manchester during his party conference.