Liberal Democrat deputy leader Simon Hughes will tonight warn that the Government's plans to cap benefits will be "harmful" and "break up families".

Further stoking Lib Dem concerns about the coalition's welfare reforms, Mr Hughes will insist ministers must revisit the proposal for a £26,000-a-year cap if it is to clear Parliament.

His intervention comes on the heels of a series of defeats in the House of Lords, assisted by a Lib Dem revolt, over other benefit reforms in the Welfare Reform Bill earlier this week.

Chancellor George Osborne announced the £500-a-week cap in 2010, saying it would ensure no jobless family would get more in benefits than the average working family.

Mr Hughes, who backs the coalition with the Tories but is popular among the Lib Dem grassroots, said he agreed with the principle that people should not be better off for staying out of work.

But he said the current plan would incentivise parents to live apart.

"The Government needs to do further work to prevent harmful consequences of the benefits cap if the changes are to be accepted by Parliament," he said.

"As it currently stands the benefits cap will break up families, as it will provide a financial incentive to be apart.

"Under the plans as they stand a couple with four children will see their benefits limited to £500 but if the parents live separately they will be able to claim up to £1,000."

Speaking to the annual dinner of the Liverpool Liberal Democrats, Mr Hughes will also warn that the cap will force families to move "across the country" to find cheaper accommodation in areas with already high unemployment.

"The Government and Parliament must find another way," he said.

"The new system allows for the Government to propose exceptions in order to stop many potentially damaging consequences of this policy.

"Today I call on the Government to make clear, at the latest before the Welfare Reform Bill comes back to the House of Commons, what it intends to do to prevent the planned benefits changes from breaking up families and damaging the lives of literally hundreds of thousands of children."