Landlords are watching nervously as the Government fine tunes its plans to cut the soaring cost of housing benefit.

Various schemes are proposed to trim back the massive bills of housing benefit - also known as Local Housing Allowance (LHA).

These include absolute maximum caps applied to benefits on new claims from April 2011 of £250 per week for a one-bedroom home, £290 for two bedrooms, £340 for three bedrooms and £400 for four bedrooms.

From April 2013, it is further proposed that benefits be cut by 10 per cent to claimants who have been on Jobseeker's Allowance for more than 12 months.

The Government wants to break the link between the level of LHA and local rents from 2013 - instead linking increases to the rate of inflation.

David Lawrenson, at the consultancy LettingFocus, says: "We think this last idea could be hard to implement, but it is still so far away that it could be dumped as policy.

"A more innovative idea is the Government plan to start paying housing benefit direct to landlords, in return for a lower level of rent, if the direct payment to the landlord secures the tenancy. It's a smart move for taxpayers, but will landlords be happy with a lower level of rent?"