BENEFIT claimants could be paid different amounts depending on where they live under controversial plans being considered by the Government.
Scrapping national rates would be controversial and lead to people in poorer areas receiving smaller handouts.
Ministers already want to set up varying rates of public sector pay, saying it should reflect living costs and not threaten private sector recovery.
Today Prime Minister David Cameron's spokesman told journalists: "We are looking at whether public sector pay should be more responsive to local pay rates and that is something we should look at for benefits too."
However, the idea was then dropped from a major speech on welfare given by Mr Cameron later.
Nonetheless, it is believed to be under consideration as part of the Government's plans to slash the welfare bill. It is thought that any local rates would apply only to benefits for people who are of working age.
Other radical reforms were floated by the PM in a speech setting out his determination to end the "culture of entitlement," which sees some people living long-term on welfare with higher incomes than neighbours who work.
Mr Cameron suggested withdrawing housing benefit from under-25s, removing the right for high-earners to keep their council homes, a reduction in the £20,000-a-year cap on housing support and limits on the additional benefit received by families with three or more children.