An Abbott government's review has suggested that only people with a permanent disability should receive the Disability Support Pension and flagged greater government control over how people spend their benefits as part of a radical shake-up of the welfare system.
But with welfare groups cautioning against the demonisation of people with disabilities, the Coalition has not been able to explain how ''permanent'' disability would be classified.
The long-awaited paper released on Sunday, also suggested that the welfare system will be cut from 75 payments and supplements to four payment categories: a family payment, disability payment, age pension and a tiered working-age payment that takes account of individual circumstances.
In late 2013, Minister for Social Services Kevin Andrews asked former Mission Australia head Patrick McClure to review Australia's welfare system, which paid out more than $110 billion in 2012-13.
The McClure team plans to conduct six weeks of public consultations and round tables in capital cities before reporting back to the government around October.
''What I support is a simplified architecture for the system,'' Mr Andrews said on Sunday, stressing the discussion paper was about having ''a discussion''.
A key suggestion of the 171-page report is that the Disability Support Pension should go only to those with a permanent impairment who cannot work. Currently, more than 800,000 people receive the DSP at the cost of about $15 billion a year.
Mr Andrews said the government did not yet have a definition of what ''permanent'' disability would be, but said mental health conditions could be ''episodic''.
While he accepted that some people with a disability could not work, he said those on the DSP were not a homogeneous group.
People with Disability Australia president Craig Wallace said he was worried about the talk of classifying people into permanent and non-permanent disabilities. ''The reality is that it isn't as simple as that. I've got a permanent disability and I work.''
Mr Wallace also cautioned against the media demonising people with disabilities and calling for evidence that the government needed to clamp down on the DSP.
''We are not rorters, we are not slackers,'' he said.
About 45 per cent of disabled Australians live in poverty, compared with the OECD average - as of 2010 - of 22 per cent. The number of people on the DSP also fell slightly between 2012 and 2013.
While Labor is open to the idea of streamlining payments, it accused the government of scaring people with disabilities.
''It's about time Kevin Andrews backed off and did his job, rather than targeting these vulnerable people,'' Labor frontbencher Anthony Albanese said.
On Sunday, Mr Andrews further flagged that people on welfare might have their welfare incomes government managed. This could see the expansion of trials that would prohibit welfare recipients from spending their payments on things such as alcohol.
''There are certain things which you can spend your money [on] and certain things that you can't,'' he told Channel Ten.
Mr Andrews also indicated that welfare payments to parents could be tied to ensuring their children attended school.
Australian Council of Social Service chief executive Cassandra Goldie said she was very concerned that the discussion paper suggested the income support system could be used for ''social engineering''.