The federal government has outlined its plan to cut income support from up to 7,000 asylum seekers living in Australia from June, in a move lawyers and refugee support groups say could leave people destitute, hungry and at increased risk of self-harm.

Some of the asylum seekers likely to be affected have been in the country more than five years waiting for the government to make a decision on their application for protection. The Department of Home Affairs has also specifically said asylum seekers studying full-time will have their support cut.

The Guardian is aware of several asylum seekers who came to Australia as children, who have since graduated from high school and won scholarships to Australian universities. Some have said they will be forced to abandon their studies.

The status resolution support services (SRSS) payment is provided to asylum seekers living in the Australian community while the government decides upon their claim for protection. It provides a living allowance – usually 89% of Newstart allowance, or $247 per week – casework support, assistance in finding housing, and access to torture and trauma counselling.

A process for asylum seekers to “transition out” – in departmental nomenclature –from SRSS will begin in April.

The government’s rationale for withdrawing support is that work rights have been restored to almost all bridging visas (on which asylum seekers live in the community) and those who are “job-ready” should be obliged to work.

A spokesperson for the department told Guardian Australia SRSS was “not a social welfare program” and was designed for short-term, tailored support.

“Individuals on a bridging visa with work rights and who have the capacity to work are expected to support themselves prior to being granted a substantive visa or departing Australia,” the spokesperson said. “Those who have the capacity to work are expected to support themselves.”

They are going to punish these people – and some will be driven over the edge Joyce Chia, Refugee Council of Australia

Settlement services organisations have been told to assess asylum seekers for “vulnerability” against four criteria: physical health barriers, mental health barriers, families with preschool-aged children and a major crisis, such as family violence or house fire.

A document from the department says families and individuals experiencing “financial hardship” will still have access to SRSS.

“If an adult chooses to study full-time, when they are able to work, they are not eligible for SRSS income support,” the same document says. Studying basic English on a part-time basis would not automatically preclude an individual’s access to the service, the department said.

Refugee advocacy organisations say they are already seeing more instances of asylum seekers self-harming, losing housing or being forced to withdraw from education programs.

The department has rolled out its timeline for withdrawing SRSS. From 9 April, a list of single male and female asylum seekers will be sent to settlement services organisations for assessment of their job-readiness.

Settlement services providers will be expected to respond by 7 May as to who is job-ready and from 4 June single asylum seekers will begin to have their support withdrawn. For families, the process will run between late May and 18 July.

It’s understood there are about 12,500 people on SRSS. The government has insisted it has no explicit target, but there is an expectation that fewer than 5,000 people will remain on the program at the completion of the government’s cutback.

Jana Favero, from the Asylum Seeker Resource Centre, said the government’s withdrawal of support for asylum seekers was counter-productive.

“The impact of the government cuts to income support is very real. People won’t be able to afford rent or to feed themselves and we are seeing this at our doors more and more each week,” she said.

“People studying English will be forced to stop. Parents training to get a job to support their family will be forced to stop.”

Favero said education providers were coming to the centre asking what they could do to keep enrolled students who were leaving courses.

“It’s chaotic and confusing. The government is actively stopping people from contributing,” she said.

Let’s not forget how many times the goal posts have moved for them since they arrived in Australia five years ago Scott Cosgriff, Refugee Advice and Casework Service

Joyce Chia, from the Refugee Council of Australia, said the consequences for asylum seekers caught up in the cuts were “completely terrifying”.

“We are already hearing of people self-harming, we’re hearing of people losing housing, of huge levels of depression and anxiety,” she said. “This is a crisis in the making and of the government’s own making. They are going to punish these people – and some will be driven over the edge.”

Many asylum seekers on SRSS find working difficult because of significant mental and physical health issues or because they are carers of young children, recognised by the department’s guidelines.

But other asylum seekers who want to work find it difficult to find jobs because of a lack of Australian experience, references or networks, or because of language barriers and uncertainty over their bridging visa making them less appealing to employers.

Scott Cosgriff, from the Refugee Advice and Casework Service, said the withdrawal of SRSS was “a new dose of cruelty”.

“Let’s not forget how many times the goal posts have moved for them since they arrived in Australia five years ago,” he said. “People who arrived with skills and motivation and a simple hope for a safe life, spent months or years in detention, then months or years being told they were not allowed to work. That is enough to destroy anyone.”