Ministers are braced for a bruising clash with the House of Lords over work and pensions Secretary Iain Duncan Smith's flagship benefit reforms.

A combination of Church of England bishops and rebel Liberal Democrats are threatening to derail a planned £500-a-week cap on benefit payments when peers vote on the measure on Monday.

Former Lib Dem leader Lord Ashdown 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 the vote on amendments to the Welfare Reform Bill.

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

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.

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".

Prime Minister David Cameron said the changes are are "a basic issue of fairness."

"Should people really be able to earn more than £26,000 just through benefits alone?

"I don't believe they should. And I think the overwhelming majority of people in the country would back that view." .

Speaking in Leeds Mr Cameron said the £35,000 equivalent wage was a "good, healthy salary".

Employment Minister Chris Grayling last night acknowledged some families would be forced to find new accommodation as a result of the changes, but strongly defended the measure.

"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.

However, the vote poses a dilemma for Labour who have to decide whether they want to try to inflict a damaging defeat on the Government, even if it means taking the blame for blocking a measure popular with much of the public.

Party officials were staying tight-lipped last night on whether they would back the bishop's amendment, saying they would be concentrating on their own compromise amendment designed to protect families facing losing their homes.

"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."

However, Grayling said Labour now needed to decide where it stood on the issue.

"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.

On Sunday Iain Duncan Smith hit out at bishops trying to block his welfare reforms, accusing them of ignoring the concerns of ordinary people.

In an interview with The Sunday Times, he acknowledged that his plans to limit the total payments any household can receive could face defeat in the House of Lords on Monday. (£)

He urged the bishops, who are leading the opposition in the upper chamber, to rethink their objections, insisting they were not doing the poor any favours.