Thankfully, Deputy Prime Minister Nick Clegg doesn't agree and on the same morning the plans were reported he went on TV to shoot them down in flames.
Good old, Nick. He has his uses.
The plans are being put forward by faceless policy advisers to David Cameron. If they went through they would mean parents would miss out on almost £700 a year if they had a third baby.
But if Mr Clegg's side of the Coalition government has anything to do with it, the 'Chinese-style' proposals will never see the light of day.
Comparing the 'brilliant idea' (source: Mr Duncan Smith, talking to The Sunday Times) to China's one-child family policy, Mr Clegg went on the BBC's Andrew Marr Show to say: "I will look at all proposals but some of the ones I have seen floated ... for instance, the idea of a two-child policy – I am not in favour of penalising the young.
"I am not in favour of a sort of Chinese-style family policy saying the state says it is OK to have two children, it is not OK to have three children.
"Remember this is child benefit that goes to families, many of whom are working. They are working very hard, often on low incomes.
"My priority is a fair approach to ongoing fiscal consolidation. If you have to balance the books you mustn't balance the books only on the working-age poor. We are, indeed, in it all together and that's why everyone should make a contribution."
A source close to Mr Duncan Smith said he backs the idea in part because it would force parents on benefits to consider whether they could afford children, rather than expecting taxpayers to pick up the tab.
He said: "Iain has sympathised with this idea for some time. He thinks it's a serious money saver. And he believes that people on benefits should have to make the same choices as other people normally do. It is slightly infantilising unless you make people make those choices themselves."
The plan, expected to slash £5 billion from the benefits bill, is being studied as a key policy for the Conservative election manifesto in 2015.
British parents currently get £20.30 a week for the first child and £13.40 for each subsequent child. But under the changes, parents who currently claim because their annual income is less than £50,000 would lose out on £696 a year.
The reform would only apply to those who have a third baby after the measure is introduced.
More:Baby's First Year
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