Drug addicts and alcoholics rendered unable to work by their condition will face active intervention in their lives to make them clean and employable, a Cabinet minister will say.
However according to reports in the Guardian, Duncan Smith's department is also planning to cut benefits from addicts who refuse treatment.
Changes to the welfare system will be focus on getting those claiming benefits because of reliance on drink and drugs like heroin and crack cocaine into rehabilitation and ultimately the world of work, Work and Pensions Secretary Iain Duncan Smith will say.
On Wednesday, in a speech to an event hosted by Alcoholics Anonymous, he will say the Welfare State has failed the almost 360,000 addicts who rely on benefits for their income.
He will argue at the event at the Houses of Parliament in London that his new Universal Credit system will encourage them to seek help and become employable again.
"The outdated benefits system fails to get people off drugs and put their lives on track," he will say.
"We have started changing how addicts are supported, but we must go further to actively take on the devastation that drugs and alcohol can cause.
"Under Universal Credit we want to do more to encourage and support claimants into rehabilitation for addiction and starting them on the road to recovery and eventually work.
"Getting people into work and encouraging independence is our ultimate goal. Universal Credit will put people on a journey towards a sustainable recovery so they are better placed to look for work in future and we will be outlining our plans shortly."
Statistics from the Department of Work and Pensions show that almost 40,000 people claim incapacity benefits with alcoholism as their primary diagnosis. The DWP says 13,300 of these people have been claiming for at least 10 years.
It also says that around 80% of Britain's estimated 400,000 "problem drug users", some 320,000 people are claiming out-of-work benefits.
Combating the effect of drink and drug addictions are the latest step in Mr Duncan Smith's controversial reform of the benefit system.
The Welfare Reform Act, which received royal assent in March, brought in the universal credit system and a £26,000-a-year household benefits.
The same month charity Save the Children claimed that a quarter of a million children will be pushed deeper into poverty by the overhaul of the benefits system because of a "blind spot" that would mean 150,000 working single mothers could lose up to £68 a week, or £3,500 a year.
Earlier this month Mr Duncan Smith revealed that half a million people are set to lose their disability benefits under plans that would slash the annual cost by £2.24bn.
Around 500,000 people in the UK who receive disability living allowance (DLA) could no longer be eligible for the replacement personal independence payment (PIP) under the plans outlined in a DWP report.
Under the reforms, two million claimants would be reassessed in the next four years and only those considered to be in need of support able to qualify.
Alcohol Concern's chief executive Eric Appleby said: "It's true that a number of people are not living their lives to their full potential because they have a drink problem.
"It's right that the Government recognise that these people need help to overcome their addiction. Incentives are only part of the story: the real answer is to make sure that high quality treatment services are fully funded and available all over the country.
"At the moment, only one in 16 people with an alcohol problem are receiving specialist alcohol treatment. In order to make this work, job centre staff will need to be properly trained in order to recognise when someone has an alcohol problem and to be able to offer the right advice."
Sir Ian Gilmore, special adviser on alcohol for the Royal College of Physicians, said: "Current treatment facilities for addicts in this country, particularly those with alcohol dependence, are woefully inadequate and we strongly support initiatives to improve this.
"However, patients must be treated with respect and given genuine choice in their treatment options, and these must be fully respected in any scheme."
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