BBC News website disability affairs correspondent
Capping incapacity benefit would lead to an increase in poverty among disabled people, campaigners warn.
More than 50% of disabled people don't have jobs
Minister want to cut automatic increases in the benefit after six months or a year and bring in incentives to work, press reports say.
But disability charities, including Leonard Cheshire and Scope, have warned the move could harm disabled people already in poverty.
Ministers are expected to confirm the plan on Wednesday, in a five year plan.
Leonard Cheshire's Jon Knight said: "The government's policies could end up making disabled people, already some of the poorest in society, even poorer.
"People whose condition causes them pain or fatigue should not be forced to look for employment."
Leonard Cheshire is calling on the government to offer additional support to severely disabled people for whom work is difficult or impossible to find.
Under the current arrangements, incapacity benefit rises after six months and again after a year.
This is thought to provide claimants with an incentive to stay on the benefit rather than finding a job.
Mr Blair, and pensions secretary, Alan Johnson, are said to favour capping IB at the lowest level and giving more money and assistance to people actively seeking work.
And the Prime Minister says that people unable to work have a right to society's support.
But Leonard Cheshire has warned the government not to succumb to "setting pre-election headline-seeking policies".
"If they do then they will be badly failing disabled people," said Mr Knight.
And another disability organisation, Scope, says the government should be focusing on removing barriers to employment.
"Disabled people who want to work should be able to, while those who are unable to should be fully supported to live life to the full," said Scope chief executive, Tony Manwaring.
The charity points to recent research that it has carried out which shows that half of employers were unsure whether they could give jobs to disabled people.
"If the government is serious about getting people off incapacity benefit and into work, it must tackle the ignorance and prejudice of employers," said Mr Manwaring.
Recent figures suggest that just over half of disabled people of working age do not have jobs.
But a third of disabled people without work would like to have jobs, whereas less than a quarter of non-disabled unemployed people want to work, the figures suggest.
With 2.7m people currently claiming incapacity benefit, at a cost of £7bn a year, both Labour and the Conservatives are keen to reassure taxpayers that they won't be wasting their money.