Coalition tax and benefit changes have left families nearly £900 a year worse off on average, Labour said as it stepped up attacks on a raft of welfare reforms.

A significant squeeze on state help starts to bite from tomorrow, with thousands joining protests across the UK yesterday against the so-called "bedroom tax".

Charities say they are braced for a period of "misery" and increased homelessness for the poorest families and the disabled as the austerity measures kick in.

But ministers say tackling the spiralling welfare bill, which counts for around a third of all spending, is a vital part of the Government's deficit-reduction strategy.

Work and Pensions Secretary Iain Duncan Smith insisted that even with the tough measures, the overall cost to the taxpayer continued to rise.

"The reality is that this country is not cutting welfare, it is managing the growth at a lower level," he told The Daily Telegraph.

"Across the UK - contrary to the headlines - all those on benefits will still see cash increases in every year of this Parliament."

Shadow chancellor Ed Balls said households faced a "shocking" cut at the same time as the top rate of income tax was reduced from 50p to 45p.

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Institute for Fiscal Studies figures showed a £9.93 boost from this year's Budget was far outweighed by a £901 annual hit from previously announced measures, he said.

"While ministers trumpet the small rise in the income tax personal allowance, they should admit that it is hugely outweighed by things like cuts to tax credits and child benefit, higher VAT, the bedroom tax and the granny tax."

"These shocking figures show the huge hit millions of families are facing at the very same time David Cameron and George Osborne are giving millionaires an average £100,000 tax cut.

"They are giving with one hand, but taking away much more with the other."

Around 660,000 social housing tenants face deemed to have a spare bedroom face losing an average £14 a week from tomorrow.

The Government says ending what it calls a "spare room subsidy" will free up unused space needed by people on waiting lists and save taxpayers £500 million a year.

Critics argue it will have a disproportionate impact on the disabled and the National Housing Federation warns it could actually increase costs as people downsize to private rented homes.

Council tax benefit is also replaced tomorrow by a new system run by local authorities but with 10% less funding.

Anti-poverty campaigners say around 2.4 million poor families face an average £138 a year rise in their bills, with nearly two million having to pay for the first time.

Working-age benefits and tax credits will rise by a below-inflation 1% from the start of the tax year on April 6 - the start of a three-year cap that represents a real-terms cut.

Two days later, disability living allowance (DLA) begins to be replaced by the personal independence payment (PIP) - which charities say will remove support from many in real need.

And later in the month, trials begin of a £500-a-week cap on any household's benefits in four London boroughs.

The chief executive of homelessness charity Crisis, Leslie Morphy, said: "Our poorest households face a bleak April as they struggle to budget for all these cuts coming at once.

"People are already cutting back on the essentials of food and heating but there is only so much they can do.

"The result will be misery - cold rooms, longer queues at food banks, broken families, missed rent payments and yet more people facing homelessness - devastating for those directly affected, but bad for us all."

As the political battle over benefits heated up, Conservative Party chairman Grant Shapps revealed figures showing that 878,300 people who were on incapacity benefit dropped their claims rather than complete a medical assessment.

That was a third of the total, he said, and included people on benefits because of blisters, acne, and strains and sprains.

Of the 1.44 million who had been reassessed, 55% were found fit to work immediately and another 23.9% able to do some level of work - leaving just 232,000 declared not fit to work.

"Welfare makes up a third of this country's spending - so it's our job to make sure it's getting to the people who really need it," he said.

"Our reforms are about freeing people from a system of dependency that's trapped them and their families for decades - and people are getting back into work as a result.

"These figures demonstrate how the welfare system was broken under Labour and why our reforms are so important."

Treasury Chief Secretary Danny Alexander said the housing benefit cut would "free up" some of a million unused bedrooms.

And he hailed plans in the Budget to crack down on social housing tenants earning more than £60,000 by allowing landlords to charge them market rents.

It was "unfair and wasteful" that they were subsidised to the tune of £75 million a year by the taxpayer, he wrote in the Sun on Sunday.

"When times are tough, those who can afford to 'pay to stay' in their homes should be helping those in the greatest housing need.

"All the additional income will be reinvested in housing," he said.