The Gillard government is expected to reap savings of $700 million by axing support payments to parents who aren't working when their youngest child turns eight, News Ltd reports.
Under a 2006 arrangement, single mothers receive $648.50 a fortnight until their youngest child turns 16.
The new plan, which comes into effect in July 2013, will end the payments when the child turns eight.
For partnered parents the $442 fortnightly income support payment will now end when the youngest child turns six.
Exemptions will continue to apply for parents in special circumstances, including those caring for a child with a disability.
News Ltd reported Workplace Relations Minister Bill Shorten said public income support should be temporary measure and not a disincentive for people finding paid work.
"We believe that, once children are at school, parents should be encouraged and supported back into the workforce," Mr Shorten said.
"A job is essential to a family's wellbeing and helping them make ends meet."
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