A possible announcement in this week's Budget could cost families in Birmingham up to £6,000 in benefits.
The Chancellor George Osborne is expected to announce a tough new regional cap on benefits, meaning households outside London receive fewer payments than those in the capital.
The last Government, with the Conservatives in coalition with the Liberal Democrats, imposed a cap of £26,000.
This was the most households were allowed to receive in benefits each year and the Government said it was designed to ensure nobody could get more from benefits than working.
But the Conservative election manifesto set out plans to cut the cap to £23,000.
Mr Osborne has revealed he will introduce a regional cap for the first time - so the the cap is even lower outside London.
He is believed to be planning to cut it to £20,000 in the rest of the country.
It would mean families currently affected by the cap would see their income fall from £26,000 to £20,000 and some families might be affected for the first time.
For example, a household which gets £25,000 in benefits would lose £5,000.
Official figures show 4,379 households in the wider West Midlands region have already had their benefits capped since 2013 - and 1,852 are currently subject to the cap.
In Birmingham alone, 719 households are currently having their benefits capped.
As the current cap is £26,000, they are all likely to lose money if it is reduced to £20,000.