The Government is braced for a bruising clash with the House of Lords over Work and Pensions Secretary Iain Duncan Smith's flagship benefit reforms.

Ministers fear a combination of Church of England bishops and rebel Liberal Democrats could undermine a planned £500-a-week cap on benefit payments when peers vote on the measure tomorrow.

Former Lib Dem leader Lord Ashdown today became the most high profile figure so far to speak out against the plans, denouncing them as "completely unacceptable" in their current form.

He said that as president of the United Nations' children's agency, Unicef, he was not prepared to support them in tomorrow's vote on amendments to the Welfare Reform Bill.

"I voted with the Government on everything until now," he told Sky News's Murnaghan programme. "I see it as my job as an ex-leader to support my successor but I will not support the benefit cap in its present form."

Despite the divisions in his own ranks, however, Deputy Prime Minister Nick Clegg said he was fully signed up to the changes.

"I completely back Iain Duncan Smith on this," he told BBC1's The Andrew Marr Show.

"It surely can't be fair, it can't be right, that you can be earning, if you like, more on benefits than someone going out earning £35,000."

Mr Clegg suggested there was some scope for softening the impact of the changes through "transitional arrangements" around the introduction of the cap.

However he flatly rejected an amendment tabled by the Bishop of Ripon and Leeds, the Rt Rev John Packer, which would exclude child benefit payments from the £500-a-week limit.

"If you did that it probably wouldn't make much sense trying to have a cap at all," he said.

Ministers appear determined to ride out the opposition, believing there is strong public support for their plans to curb the benefits dependency culture and "make work pay".

Mr Clegg brushed aside "apocalyptic" claims that thousands of families - particularly in London and the South East - could be forced to leave their homes as a result of the changes.

"This is not going to be some sort of punitive programme of mass homelessness," he said. "Of course we won't allow that to happen."

Labour, in contrast, reacted cautiously, suggesting that it would try to find a compromise between the Government and the bishops.

"Labour won't be voting against the benefits cap because we support the principles and the responsibility to take a job if you can work," a spokesman said.

"But we will be seeking to amend the Bill, to bring a compromise between the bishops and the Government because we don't think council taxpayers should be hit with a massive bill for homelessness."

Bishop Packer said he hoped to win support in the Lords for his amendment, which was intended to protect the most vulnerable families.

"What we're talking about tomorrow is children in families where the welfare benefits have been cut to a point where they are less than Parliament actually has said they should be, because that's what a cap does," he told the BBC's Sunday Morning programme.

However, Mr Duncan Smith launched a blistering attack on the bishops, accusing them of ignoring the concerns of ordinary families who try to "do the right thing".

"The question I'd ask these bishops is, over all these years, why have they sat back and watched people being placed in houses they cannot afford? It's not a kindness," he said.

"I would like to see their concerns about ordinary people, who are working hard, paying their tax and commuting long hours, who don't have as much money as they would otherwise because they're paying tax for all of this. Where is the bishops' concern for them?

"It's all very well for the bishops to express a political opinion, but I would love them to ask about the poor people on low incomes who are working hard, whose families share rooms, who are doing the right thing."

Employment Minister Chris Grayling tonight acknowledged some families would be forced to find new accommodation as a result of the changes.

"There certainly will be people who have to move house as a result of this, who have to move to a part of town they can afford to live in, but surely that is right," he told BBC Radio 5 Live's Pienaar's Politics.

With Labour officials refusing to say whether they would support Bishop Packer's amendment, Mr Grayling said Labour now needed to decide where it stood on the issue.

"I really think Labour has to decide: does it want to deliver the kind of change to the welfare state that all the evidence says the public overwhelmingly want or is it going to line up on the other side and try and chip away at reforms that are essential?" he said.