Fewer than 10% of welfare claimants are "the archetypal Benefits Street layabout", a senior Labour MP has said as she urged Ed Miliband to come up with an effective alternative to the Government's austerity measures.
Former frontbencher and leadership contender Diane Abbott rebelled against the Labour whip to oppose George Osborne's welfare cap, claiming it would lead to "arbitrary cuts".
She insisted she was an "Ed Miliband loyalist", but said Labour needed to move quicker in setting out its economic plans ahead of next year's general election.
Labour supported the welfare cap, aware that the Chancellor was setting a political trap that could have allowed the Tories to portray the Opposition as soft on the issue if they voted against it.
But Ms Abbott told BBC Radio 4's Week in Westminster that the Tories had been allowed to frame the welfare debate, and blamed Blairite former shadow work and pensions secretary Liam Byrne for accepting their argument, putting Labour in an "impossible situation".
"My argument is we should never have allowed them to frame the conversation in this way in the first place. The problem was Liam Byrne was our spokesperson for three years and basically he conceded the Tory case," she said.
"I was not going to allow George Osborne to swagger around, saying that he is putting all these Benefit Street layabouts to the sword, when in fact the reality is he is playing a game."
She added: "There's no doubt benefit claimants are really unpopular. But that's partly because the public doesn't realise that over half of benefits go to old people, another quarter are in-work benefits, less than I think 10% go to the archetypal Benefits Street layabout.
"However we have allowed them to frame the debate in that way."
Mr Miliband has faced dwindling poll leads and mounting pressure over his leadership, with one recent survey finding most voters do not view him as a prime minister in waiting.
Research for The Times found fewer than one in five adults, just 19%, could imagine the Labour leader in No 10 - putting him significantly behind Prime Minister David Cameron when he was in opposition.
The YouGov poll found that only 26% of voters think Labour is ready for government, while among the party's supporters fewer than half, 49%, believe Mr Miliband looks like the country's next premier.
Ms Abbott said: "I'm an Ed Miliband loyalist, but I concede we have to move a little quicker in framing our economic message."
She added: "I think the fundamental question, which I am not well placed to answer, is where do we stand in relation to austerity? Are we offering an alternative to austerity? And Ed Balls and Ed Miliband have to make up their minds."