Sir Keir Starmer has been accused of creating a “two-tier” benefits system after being forced to climb down over Labour welfare cuts to avoid a humiliating defeat in the Commons next week.
Adjustments to universal credit would also see incomes protected, a letter from Work and Pensions Secretary Liz Kendall to MPs revealed.
But the cuts future will hit future claimants, sparking fears the government is effectively creating a two-tier system in which people with the same disabilities could receive different welfare incomes.
Labour MP Alex Sobel said disparities in how benefits claims are reviewed make him “uncomfortable”.
He told BBC Newsnight: “Whether you acquire disability at birth, five years ago or tomorrow, it should be the same for everyone.”
Labour MP Brian Leishman branded the plan a “two-tier welfare programme” and said it “would still put people into poverty”.
Sir Keir said the changes strike "the right balance".
The Prime Minister said: "It's very important that we reform the welfare system, because it doesn't work and it traps people, and therefore we're going to press ahead with the reforms.
“And the principles are if you can work, you should work. If you need help getting into work, you should have that help and support. But if you can't work or there's no prospect of work, then you must be protected.
"We need to get it right. That's why we've been talking to colleagues and having a constructive discussion. We've now arrived at a package that delivers on the principles with some adjustments, and that's the right reform, and I'm really pleased now that we're able to take this forward."
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The rollback on welfare cuts came after crisis talks with backbenchers. Some 126 Labour MPs signed an amendment that would halt the legislation in its tracks.
Sir Keir’s Universal Credit and Personal Independence Payment Bill has its second reading on Tuesday, the first opportunity for MPs to support or reject it.
A spokesperson for Number 10 said: “We have listened to MPs who support the principle of reform but are worried about the pace of change for those already supported by the system.
“This package will preserve the social security system for those who need it by putting it on a sustainable footing, provide dignity for those unable to work, supports those who can and reduce anxiety for those currently in the system.
“Our reforms are underpinned by Labour values and our determination to deliver the change the country voted for last year.”
The government’s original package restricted eligibility for PIPs, the main disability payment in England, and limited the sickness-related element of universal credit.
Existing claimants were to be given a 13-week phase-out period of financial support in an earlier move that was seen as a bid to head off opposition by aiming to soften the impact of the changes.
The proposed cuts aimed to save £5billion a year by 2030, with working-age health-related benefit spending expected to rise from £52bn in 2024 to more than £66bn without any changes to the system.
The U-turn on PIP for around 370,000 existing claimants will cost the government at least £1.5bn, according to the Institute for Fiscal Studies.
In her letter, the Work and Pensions Secretary said: “We recognise the proposed changes have been a source of uncertainty and anxiety.
“We will ensure that all of those currently receiving PIP will stay within the current system. The new eligibility requirements will be implemented from November 2026 for new claims only.
“Secondly, we will adjust the pathway of Universal Credit payment rates to make sure all existing recipients of the UC health element – and any new claimant meeting the severe conditions criteria – have their incomes fully protected in real terms.”
The change in PIP payments would protect some 370,000 existing claimants who were expected to lose out following reassessment.
If the legislation clears its first hurdle on Tuesday, it will then face a few hours’ examination by all MPs the following week – rather than days or weeks in front of a committee tasked with looking at the Bill.
The so-called “reasoned amendment” tabled by Treasury select committee chairwoman Dame Meg Hillier had argued that disabled people have not been properly consulted and further scrutiny of the changes is needed.
She said: “This is a good deal. It is massive changes to ensure the most vulnerable people are protected… and, crucially, involving disabled people themselves in the design of future benefit changes.”