The Department for Work and Pensions has rejected suggestions that the Government risks breaching its self-imposed cap on welfare spending because of the rising cost of disability benefits.
Internal Government memos obtained by the BBC are reported to say that the Employment and Support Allowance (ESA) is "one of the largest fiscal risks currently facing the Government", leaving it "vulnerable to a breach" of the cap, which is set at £119.5 billion for 2015/16.
But the DWP said it was "outrageous" to suggest that it was on track to bust the cap, which covers welfare payments excluding the state pension and some unemployment benefits.
If the total annual benefit spend comes in over the cap, ministers must come to Parliament to explain why and ask MPs to approve the additional spending.
According to the BBC, the memos state that the cost of ESA is projected to rise by nearly £13 billion between the current financial year and 2018-19, largely due to people moving on to the benefit from Jobseeker's Allowance, which has more sanctions for misconduct.
The documents also suggest that people are staying on ESA for longer than expected, because of the severity of their illnesses and disabilities. While setting out a range of options for cutting costs, one memo reportedly concedes that there is "not much low-hanging fruit left".
A DWP spokesman said: "These are spurious scenarios and do not reflect our forecast of future spend provided at the Budget.
"It is outrageous to somehow link these to us potentially breaching the welfare cap."
The Department pointed to figures showing that one million claimants of Incapacity Benefit - which is being replaced by the ESA - have been found fit for work and that there are now 160,000 fewer people claiming sickness benefits than in 2010 and 700,000 more people looking or preparing for work.
But the chair of the House of Commons Work and Pensions Committee said that ESA did not appear to be doing any better than Incapacity Benefit.
Dame Anne Begg said large groups of people appeared to be being "parked" on the benefit in the "work-related activity" group, which covers all those who are found neither to be fully fit for work nor so disabled that they cannot be expected to look for employment.
She warned that the decision of private company Atos to withdraw from its contract to conduct fitness assessments of claimants was slowing down the process, and said ministers must find a replacement for the company "in the next few months" to ensure continuity.
Asked whether ESA was proving an improvement on Incapacity Benefit, Dame Anne told the BBC Radio 4 Today programme: " It doesn't appear as though it's actually doing any better. A lot of the complaints and criticism of Incapacity Benefit can now be laid at the door of Employment Support Allowance - the fact that the help to get people into work and to overcome the barriers to work doesn't seem to be there for large groups of the people, who are effectively being parked in the WRA - work-related activity - group.
"The Work Programme statistics suggest that only 5% of that group are actually getting jobs."
She added: " One of the top-heavy elements of ESA was the constant reassessments. A big criticism of Incapacity Benefit was that people were put on it and left and nobody reassessed them. With the ESA there is constant reassessment, but that is expensive and it's putting a burden on the health assessors employed by Atos in order to keep up with the numbers."
Dame Anne said ministers appeared to have "believed their own rhetoric" about large numbers of claimants being fit for work.
"ESA has tightened the criteria, but what they've actually discovered - lo and behold - instead of lots of people languishing on Incapacity Benefit, they've found when they've reassessed them that these people actually are quite ill or very disabled," she said.
"That shouldn't have come as a surprise to the Government, but perhaps it believed its own rhetoric when it's been talking about these large numbers of people who could be moved into work but haven't been. Actually, the system is not giving them the help in order for them to do that."
For Labour, shadow work and pensions secretary Rachel Reeves said the DWP was at " crisis point" and she called on David Cameron to intervene personally.
"The Work Capability Assessment is in meltdown, there are huge backlogs for Personal Independence Payments, a Work Programme that's failing disabled people and the chaos of Universal Credit," she said.
"It is a catalogue of total failure and threatens huge costs to the taxpayer. David Cameron must urgently get a grip of this chaotic department."
A Treasury spokesman said: "We are supportive of the action taken to put the delivery of ESA back on track with the Atos backlog now coming down.
"We will continue working closely with DWP to monitor forecast spending and are confident it will remain within the welfare cap."