The government is to abolish “counterproductive” three-year benefit sanctions, in an official acknowledgement that depriving jobless people of social security income for long periods undermines their attempts to move into work.

The announcement, made by the work and pensions secretary, Amber Rudd, during a speech on employment on Thursday morning, was welcomed by campaigners and MPs, who encouraged her to make further changes to the controversial policy.

The move marks a sharp change of tone by the government, which has for years doggedly defended the sanctions regime as a way of persuading people into work, despite mounting criticism from MPs, academics and campaigners that sanctions are major drivers of poverty and hardship.

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Sanctions withhold unemployment benefit as punishment for apparent infringements of benefit rules, such as failing to attend a jobcentre meeting, or not spending enough time looking for work. Most are imposed for four weeks, a loss of benefit income of about £300. Three-year sanctions are issued when a claimant has made three or more serious breaches of work-related requirements.

Sanctions are notorious among claimants for the way they are issued, often for seemingly capricious and absurd reasons, such as arriving at a jobcentre meeting two minutes late, or for missing an appointment after being taken to hospital after suffering a cardiac arrest.

Rudd said the three-year sanctions would be phased out by the end of the year. In a House of Commons statement, she said: “Three-year sanctions are rarely used, but I believe that they are counter-productive and ultimately undermine our goal of supporting people into work.

“I have reviewed my Department’s internal data, which shows that a six-month sanction already provides a significant incentive for claimants to engage with the labour market regime.

“I agree with the Work and Pensions Select Committee that a three-year sanction is unnecessarily long and I feel that the additional incentive provided by a three-year sanction can be outweighed by the unintended impacts to the claimant due to the additional duration.”

Three-year sanctions were introduced in 2012 under the auspices of the then work and pensions secretary Iain Duncan Smith and the then employment minister Chris Grayling as part of a severe tightening-up of benefits rules.

Sanction numbers increased rapidly as a result, reaching a high point in 2013 when over 1m were issued. In 2015, academics found a link between sanction levels and increased food bank use.

A major five-year academic study of welfare conditionality, published last year by the University of York, concluded sanctions were ineffective at getting jobless people into work and were more likely to reduce those affected to poverty, ill-health or even survival crime.

The National Audit office criticised the government’s sanctions policy in a scathing 2016 report, which concluded ministers had no evidence to show that sanctions worked, and no interest in finding out the effect on individual claimants. Disabled people who were sanctioned were less likely to find work as a result, it found.

Facebook Twitter Pinterest The shadow work and pensions secretary, Margaret Greenwood, said Labour would scrap the Tories’ benefit sanctions regime. Photograph: Jon Super

Official figures published by Labour indicated that 32,647 claimants had been issued with sanctions of more than six months duration since 2012. Some 20,000 of these were accounted for by people on universal credit.

Margaret Greenwood, the shadow work and pensions secretary, said Labour would scrap the sanctions regime. “There is clear evidence that sanctions and excessive conditionality do not help people into sustained employment. They also cause stress and anxiety for many and are one of the key reasons that people ask for help at food banks.”

The sanctions expert David Webster, of Glasgow University, welcomed the move and said he hoped it was a sign social security policy was beginning to be guided by evidence rather than ideology.

Frank Field, the chair of the work and pensions select committee, said: “Today’s announcements are a step in the right direction – gone are the days of those appalling three-year sanctions – and show she has not been put off by the size of that task, but there is still very much to do.”

Alison Garnham, the chief executive of Child Poverty Action Group, welcomed the change: “We hope today’s announcement will be followed by a review of the sanctions system overall because all the evidence shows it is overly harsh and counterproductive for claimants.”

• This article was amended on 3 June 2019. In an earlier version a picture caption incorrectly implied that Margaret Greenwood said Labour would “scrap benefit sanctions altogether”.