New sanctions against those who refuse work could leave some families in "extreme hardship," charities warn.
The sanctions are part of a wholesale shake-up of the benefit system aimed at making work pay.
Those judged fit to work but who refuse jobs could lose benefits for three years in the most "extreme" cases.
Oxfam said leaving people with no income could expose them to the risk of destitution. Save the Children said it would create a "climate of fear".
Work and Pensions Secretary Iain Duncan Smith published a white paper on Thursday detailing what he claimed was the biggest shake-up in benefits since the welfare state was founded in the 1940s.
The main thrust of the reforms, which will be introduced over the next 10 years, starting in 2013, is to tackle the culture of worklessness Mr Duncan Smith says has taken root in some parts of the country and which he said was a "national crisis".
The plans have received the broad backing of Labour, although shadow ministers have questioned whether there are enough jobs for it to work.
Mr Duncan Smith says the country could not afford to have five million people of working age on out-of-work benefits - with 1.4 million of them have been claiming them for nine of the last ten years. Almost two million children in the UK are growing up in homes where no-one works, he said.
He believes his new Universal Credit, which groups together a series of benefits into a single payment, will simplify claims and reduce fraud and error - while a new Work Programme will help get people back into work.
'Children will suffer'
Under the plans, the low paid will be able to keep more of the money they earn - but there will be "tougher penalties" for those who repeatedly fail to look for work.
In the most "extreme" cases, people could lose Jobseekers' Allowance for three years if they have "serially and deliberately breached conditions" and other sanctions have not worked.
Sally Copley, of Save the Children, said it was "hard to see how Britain's poorest children are going to be helped using sanctions creating a climate of fear".
"It is children who will suffer when a single mum is told to take a job, but there is not suitable childcare available. It is the children who will suffer when the safety net is withdrawn for three months."
And Oxfam's UK Poverty director Kate Wareing said the changes proposed would "expose people to the risk of destitution".
"Removing benefits and leaving people with no income will result in extreme hardship for them and their families," she said.
She said even after the changes were made, the lowest paid would still keep less of their pay than high earners.
However Deputy PM Nick Clegg said on Thursday sanctions were "not seeking out people to clobber" but were meant as a deterrent. "I suspect the top level will be used for a tiny, tiny number of people who really are systematically abusing the system."
Currently someone on Jobseekers' Allowance who refuses a job can lose their benefits for up to six months.
Those who are fired, refuse a job or quit one without good reason are subject to a "varied length sanction" of between one and 26 weeks. Unemployed people who refuse to attend employment programmes can face "fixed length sanctions".
Between April 2009 and March 2010 about 97,000 fixed-length about 59,000 sanctions of variable lengths were imposed.
Under the new system, claimants who refuse to apply for jobs, accept jobs or take part in "mandatory work activity" will first see their Jobseekers' Allowance stopped for three months, a second failure would lead to a six-month freeze and a third failure would see all Jobseekers' Allowance payments stopped for three years.
Questioned on BBC's Newsnight, Welfare Minister Lord Freud said the new sanctions would only be imposed in a small minority of cases, saying: "I would be incredibly surprised if we really talk about people going through to the third strike. In reality the numbers will be very few indeed."
The government says it is also considering turning hardship payments into loans but insists it is committed to "protecting vulnerable people and their dependants".
Tim Nichols, of the Child Poverty Action Group, expressed concern about such a move and also stressed the need for benefit payments to continue going to the "main carer".