A DECISION to axe child benefit for 1.2 million better-off families – snatching back about £1,750 a year from parents with two children – triggered an angry backlash last night.

Chancellor George Osborne was accused of forcing families to “take the hit” for the economic crash and for penalising parents who give up work to look after their children.

The move was attacked as unfair because families with one higher-rate taxpayer will lose the benefit, yet those with two earners paying basic-rate tax will continue to receive it – even though their combined income is much higher.

So, the axe will hit a single breadwinner earning more than £43,875 a year, but leave untouched a further 900,000 families with a joint income as high as £87,000.

Criticism came from children’s charities and the Christian People’s Alliance, which warned the measure was a “tax raid on the traditional family unit”.

Last night, there was speculation that the Government is considering a second raid on child benefit – withdrawing it for over-16s.

Mr Osborne tried to sweeten the pill – the first curb on universal benefits, as the Government hunts for huge welfare savings – with a pledge to introduce the first “benefits cap”.

To be set at about £26,000 a year and affecting 50,000 families, who will lose an average of £93 a week, the cap would prevent anyone receiving more in handouts than the average household wage, the Chancellor said.

About 37,000 families across the North-East region already face eviction because they live in properties that will be too expensive.

Mr Osborne told the Conservative Party conference in Birmingham that the changes – to be introduced in 2013 – were “tough, but fair”.

He said: “It’s very difficult to justify taxing people on low incomes to pay for the child benefit of those earning so much more than them. These days, we’ve really got to focus the resources where they are most needed.”

Announcing the benefits cap, he said: “No more openended chequebook. A maximum limit on benefits for those out of work – that is what the British people mean by fair.”

Darlington Labour MP Jenny Chapman, who formerly chaired Darlington Borough Council’s children and young people’s scrutiny committee, said: “If people have faith in the benefits system it is reasonable to ask people who earn more to sacrifice their benefits.

“But this is only reasonable to do if you have a fair system, where the people who are claiming are claiming fairly and are seeking work when they can.

“The policy is not totally consistent with what the Conservatives said in their election campaign, when they promised not to touch child benefits.”

Alison Garnham, chief executive of the Child Poverty Action Group, said: “Child benefit is a strategic benefit that works, it’s simple and everybody understands it.

“Even in better-off families, parents face the costs of raising children.”

The UK’s largest children’s charity, Barnardo’s, said it reluctantly backed the move because it would protect the poorest while saving the country money.

However, Fiona Weir, chief executive of the Gingerbread charity for single parents, attacked the decision, saying: “It is very unfair that single parents will lose this vital family support at a much lower income than working couples.”

One senior Cabinet minister, Health Secretary Andrew Lansley, admitted a voter backlash was inevitable, telling a fringe meeting: “We will not be popular. We must expect not to be popular, because of the nature of the difficult decisions that we have to do.”

The measure was seen as a far bolder attack on universal benefits for the better-off than anything attempted by Margaret Thatcher’s governments, which considered something similar – but stepped back.

The Tories also faced criticism that staff handed a promotion because of their hard work – one taking them into the higher-rate tax bracket – could end up losing out because of lost child benefit.

To add to the pressure on Mr Osborne, a year ago he told the Conservative conference: “We will preserve child benefit.”

It was “valued by millions”, he added.

During his speech yesterday, Mr Osborne rammed home his message that severe spending cuts were unavoidable, saying: “If we don’t get a grip on Government spending, there will be no growth.”

He also attempted to dispel some of the gloom in danger of engulfing the Government, telling his audience: “Just over the horizon lies the Britain we are trying to build."