The Government has been forced into an embarrassing Budget U-turn over plans to slash disability benefits for young people.

Taoiseach Enda Kenny confirmed a decision to cut rates paid to under-25s has been paused after a backlash from voters, charities and opposition parties.

Mr Kenny told the Dail the Cabinet will not press ahead with plans to chop allowances to new claimants as young as 16 from January.

During Leader's Questions, the Taoiseach said: "The Government doesn't get everything right all the time. There's an issue here that is of great sensitivity and we're reviewing it on that basis."

The coalition's controversial two-day 3.8 billion euro austerity Budget features a slew of indirect taxes hitting every aspect of daily life. Vulnerable families and the disabled were left reeling from multimillion-euro benefit cuts, with shoppers, motorists, savers and investors hurled into the firing line of tax hikes.

Earlier, angry callers hit the airwaves as Finance Minister Michael Noonan and Public Expenditure Minister Brendan Howlin answered questions on RTE's Today with Pat Kenny radio show. Stephen O'Riordan was on the verge of tears as he criticised Mr Noonan for bailing out the banks and paying unguaranteed bondholders while a verbal promise Mr Kenny made to his teenage sister Joanne not to touch disability benefits has been broken.

The 15-year-old from Millstreet, Co Cork, was born without arms or legs but remains actively involved in school and community events. "All our lives myself and my family have fought for my sister to live an independent life and that money would have helped my sister to go on to a third level education," said Mr O'Riordan.

Disability allowance was due to be cut for under-18s and slashed from 188 euro to 100 euro for 18 to 21-year-olds and from 188 euro to 144 euro for 22 to 24-year-olds. Minister for Social Protection, Joan Burton, has ordered a review by Ita Mangan, chair of the Tax and Social Welfare Commission.

Ms Burton - who had to shave 475 million euro from her department's budget - said no existing claimants between 16 and 24 would ever receive a cut in their allowance. But proposals for new claimants from January would have eventually resulted in annual savings of 46.6 million euro.

"I've listened particularly to parents, parents of severely disabled children, who have said that they fear that children who are 14 and 15 years of age could lose out when this reform comes into place. I've listened to that and I've discussed it with my colleagues and, as the Taoiseach said earlier... the reform is paused."

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