THE UK’s biggest jobless families could receive a windfall of £3.5billion funded by the taxpayer if plans to lift the two-child benefit cap go ahead.

Since 2017, parents have been limited to claiming child tax credit and universal credit for their first two children, applicable to children born after April 2017.

An exception is made for children born as a result of rape.

Now, Labour and Reform are both pushing to ditch the policy brought in by the Tories.

The Labour party has long been divided over the issue, with Sir Keir Starmer ruling out scrapping the cap in 2023.

However, on Thursday the PM hinted he’s ready to heed the demands of Labour rebels and scrap the two-child benefit cap.

Sir Keir gave his strongest indication yet that he will remove the threshold that limits handouts for a third kid.

A review of official data indicates that removing this restriction would provide thousands of pounds in additional benefits annually to 180,000 large families where no one is employed.

But critics of the cap claim it has worsened child poverty.

The stringent rule, which reduces payments such as Universal Credit and Child Tax Credit, is costing struggling households an average of £4,300 each, according to a new report from the Institute for Fiscal Studies.

Official figures from the Department for Work and Pensions (DWP) show a staggering 450,000 families were stung by the cap last year.

Most of those hit – around 280,000 families – have three kids, while 120,000 have four, and 56,000 are raising five or more little ones.

The DWP doesn’t reveal exactly how much the biggest families are missing out on.

However, separate stats from HMRC show child benefit – which isn’t affected by the cap – is still being paid to some 15 families with a whopping 13 children or more.

More than 16,000 families are getting child benefit for six kids, and over 5,000 are claiming for seven.

Incredibly, nearly three in five of the families hit by the cap have at least one adult in work – proving that even grafting parents aren’t safe from the squeeze.

However, this leaves around 180,000 where no one in the household is in any kind of paid work.

But former work and pensions secretary Esther McVey last night said the figures underlined the case for keeping the cap in place.

She said: “Encouraging people to have children that they cannot afford themselves, and expecting others to pick up the tab for them, is financially and morally indefensible.

“I expect nothing better from Labour, but it is a mistake for Nigel Farage to chase Labour to the Left.”

Laying the groundwork for a U-turn on his election claim the cap won’t be abandoned, Sir Keir said earlier this week that he was “determined to drive down child poverty”.

Visiting a glass manufacturing plant in Warrington, on three occasions he wouldn’t rule out a change in policy.

Amid growing pressure from furious backbench MPs, Sir Keir insisted ministers were “looking at all options” around tackling poverty among kids.

And Nigel Farage raised eyebrows when he announced that a Reform-led government would ditch the cap completely.

How many children does the cap affect?

Then work and pensions secretary Iain Duncan Smith first proposed the policy in 2012 under the Conservative-Liberal Democrat coalition government.

It was not until 2015 that then chancellor George Osborne announced a cap would be introduced from the 2017/2018 financial year.

The coalition said it made the system fairer for taxpayers and ensured households on benefits faced the same financial choices around having children as those not on benefits.

Government figures show one in nine children (1.6m) are impacted by the two-child limit.

In the first three months Labour were in power, 10,000 children were pulled into poverty by the cap, the Child Poverty Action Group found.

In May, it said another 109 children are pulled into poverty each day by the limit, adding to the 4.5 million already in poverty.

The Resolution Foundation said the cap would increase the number of children in poverty to 4.8 million by the next election in 2029-30.

Torsten Bell, the foundation’s former chief executive and now a Labour Treasury minister, said scrapping the cap would lift 470,000 children out of poverty.