Hundreds of thousands of young people could be stripped of housing benefit and forced to live with their parents as part of a new welfare crackdown signalled by David Cameron.
The Prime Minister insisted the system was giving the wrong incentives as he urged more action to prevent feckless families relying on state handouts.
The comments, in an interview with the Mail on Sunday, come ahead of a keynote speech on welfare Mr Cameron is due to deliver next week.
The measures said to be under consideration include scrapping most of the £1.8 billion in housing benefits paid to 380,000 under 25s, worth an average £90 a week, forcing them to support themselves or live with mum and dad instead.
It could also mean stopping the £70-a-week dole payment for individuals who do not try hard enough to get work and forcing a hard core of unemployed to do community work after two years - or lose all their benefits.
According to the newspaper, ministers are also looking again at plans to limit child benefit to a couple's first three children - although Mr Cameron will stop short of raising the idea.
Mr Cameron said the existing benefits system was "sending out strange signals on working, housing and families".
He went on: "A couple will say, 'We are engaged, we are both living with our parents, we are trying to save before we get married and have children and be good parents.'
"'But how does it make us feel, Mr Cameron, when we see someone who goes ahead, has the child, gets the council home, gets the help that isn't available to us?' One is trapped in a welfare system that discourages them from working, the other is doing the right thing and getting no help."
Asked if he would take action against large families who were paid large sums in benefits, the premier replied: "This is a difficult area but it is right to pose questions about it. At the moment the system encourages people not to work and have children, but we should help people to work and have children."