The government has unveiled plans to make the welfare system fairer by introducing a £26,000-a-year cap on benefits paid to non-working households. Although the proposals suffered a hitch this week when they were defeated in the House of Lords, they are still likely to go ahead.

What are the proposed reforms?

The proposals, which form part of the Welfare Reform Bill, would limit maximum working-age benefits to £500-a-week. This would ensure that no household claiming unemployed benefits could earn more than the average weekly wage of a working household.

An estimated 67,000 families would lose an average £83 a week under the reforms, according to the Department of Work and Pensions (DWP). Last year the DWP predicted that only 50,000 families would be affected, but has since revised that figure.

Members of the House of Lords have asked that Child Benefit - which is paid to all UK parents who have children under 16 - is left out of the £26,000 cap but Ministers have vowed to undo the House of Lords' amendment and push the Bill through regardless.

It's predicted the cap would save the country £290million in 2013-14 and £330million in 2014-15 but critics say it could increase child poverty.

If you're claiming benefits, here's a closer look at how the reforms could affect you.

Who will the reforms affect?

The £26,000 annual cap would apply to all benefit-claiming families in England, Scotland and Wales from 2013. Northern Ireland has its own social security rules, but once passed, the Welfare Reform Bill would likely be introduced there too.

Around half of the 67,000 families likely to be affected by the reforms live in Greater London, where rents and housing benefits are higher.

Anyone claiming Jobseeker's Allowance, Income Support and Employment Support Allowance as well as other benefits like Housing Benefit, Child Benefit, Child Tax Credits or Industrial Injuries Disablement Benefit would be affected by the cap.

Those on Working Tax Credit, Disability Living Allowance or Personal Independence Payment would be exempt from the cap, along with war widows and widowers.

If the total of all your benefits exceeds £26,000, your income will be cut when the reforms come take effect next year.

Who can claim what?

Child Benefit is paid to anyone with children aged up to 16, or 19 if the child is in full-time education. The payment is worth £20.30 a week for the eldest child and £13.40 a week for younger siblings.

Jobseeker's Allowance is paid to anyone actively looking for work or working fewer than 16 hours per week. You must be living in England, Wales or Scotland and be aged over 18 but below State Pension age to claim.

The under 25s can claim a maximum of £53.45 each week, over 25s can claim £67.50 and married couples or those in civil partnerships can claim £105.95.

Income Support is available for people on a low income. The criteria for claiming Income Support is fairly broad, but you can find out if you qualify here. Income Support is worth between £53.45 per week and £105.95 per week.

Housing Benefit is available to people who rent a property and whose income and capital, such as savings and investments, are below a certain level. Again you must meet certain criteria to qualify, which you can learn more about here.

Child Tax Credits are available for people who have a new baby or who are responsible for any children under 16. For more details, click here.

Industrial Injuries Disablement Benefit is available to anyone who is ill or disabled because of an accident or conditions related with work. The amount you're entitled to depends on your own personal circumstances, but you can find more information here.

Are the reforms definitely going ahead?

The government says it intends to overturn the Lords' defeat in the House of Commons and push the bill through without the Child Benefit amendment.

Unless an agreement is reached between Members of Parliament and the House of Lords, the Bill is likely to 'ping-pong' between the two chambers, delaying the reforms.

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