The National Schizophrenia Fellowship says a survey of 660 people in England and Wales who suffer from schizophrenia, manic depression and anxiety shows threats of cuts over the last year have added to the stress caused by widespread poverty and debt among the mentally ill.

The NSF says people with depression are even more likely than others with mental illness to suffer because of fears about cuts.

Some have even tried to commit suicide because of their worries about the future.

However, one in 20 said the government's review of benefits had made them feel better.

Poverty

According to the survey, nearly all mentally ill people are living below the poverty line, as defined by the Council of Europe.

Ninety per cent are unemployed and 40% of those surveyed said they were in debt.

Two-thirds already use their disability allowances on basic necessities such as food.

Social Security Secretary Alistair Darling will decide on the future of benefits for the mentally ill

There have been widespread fears about changes to disability benefits as part of the government's review of welfare reform.

The NSF says the government is expected to announce a series of new tests for incapacity benefit in the Queen's speech.

It fears these will make it more difficult for people with mental illness to get benefits.

It is also concerned that the changes could herald cuts in benefit levels and says stricter tests of mental illness could be traumatic for those with severe problems.

The Department of Social Security dismissed the fears as "speculation".

A Green Paper in March ruled out means testing for Disability Living Allowance, but said nothing about reports that the government was planning to tax some benefits.

The government has since announced that it has "no current plans" to tax benefits, but suspicion still lingers.

The NSF says benefit cuts could mean people could no longer attend day centres, visit relatives who provide emotional support or pay for prescriptions.

It says they could mean the difference between someone surviving in the community or having to go into hospital which can have a harmful effect on patients.

Stigma

The NSF says the majority of unemployed people felt they could not work because of their illness.

But three out of 10 blamed social attitudes to mental illness for the huge level of unemployment among people with mental health problems.

The NSF says many severely mentally ill people might not be able to do full-time jobs because of the stress involved.

It adds that meaningful voluntary and therapeutic work which was sensitive to their needs could help them back into part-time jobs or be seen as an end in itself.

The NSF is calling on the government to give a guarantee that it will not cut benefits.

Review

It also wants a review of the way benefits are assessed for the mentally ill.

Threatened cuts in benefits have driven some to despair, says the NSF

It says benefits are geared too much towards the physically disabled and do not take into account issues such as problems with concentration, filling in forms and attending appointments.

It adds that people with mental illness often find it difficult to talk about their condition because of the stigma attached to it.

The NSF says the benefits system should also take into account the fact that people with mental health problems may have an uneven working life, including periods when they cannot work.

Currently, it says, the system penalises those who start work because they cannot immediately restart their benefits if they suffer a relapse.

Gary Hogman and Martin Chapman, authors of the Surviving in the Community report, said: "The message from this report is clear and unambiguous: benefits are already too low, forcing people to spend payments meant for care on food, clothing and accommodation.