Iain Duncan Smith has declared that foster carers and members of the armed forces will be exempt from the bedroom tax, in a U-turn on the government's forthcoming policy.

In a written ministerial statement, the works and pensions secretary announced that people who are approved foster carers will be allowed an additional 'spare room' whether or not a child has been placed in with them or whether they are between placements.

To qualify for exemption, foster parents will have had to have fostered a child or have become an approved foster carer in the last 12 months.

Likewise, adult children in the armed forces that continue to live with their parents will be treated as if they still live at home, even when deployed on operations.

In his letter, Mr Duncan Smith says that the intent of the government was to use discretionary housing payments to protect the estimated 5,000 foster carers and "rather fewer armed forces personnel".

The minister writes that he is "also issuing guidance to local authorities emphasising that discretionary housing payments remain available for other priority groups including the needs of people whose homes have had significant disability adaptations and those with longterm medical conditions that create difficulties in sharing a bedroom."

The bedroom tax, which comes into force on April 1, will see social tenants who are deemed to be under-occupying their homes hit with reductions to their housing benefit.

In the commons yesterday, Mr Duncan Smith said that disabled children would be protected from the bedroom tax, with local authorities given the freedom to decide whether or not a disability means a household qualifies for an extra room.

Mr Duncan Smith ends the statement by defending the government's welfare reforms, and criticises the previous Labour administration's record on the benefits system.

"Under the previous government, housing benefit almost doubled in 10 years to £20 billion, with households living in homes that are too big for them, whilst there are 2 million households in England on waiting lists, and 250,000 families living in over-crowded accommodation."

Chartered Institute of Housing chief executive Grainia Long said: “These concessions are welcome but they are not enough. Other people are also unfairly affected.

“For instance, people who need a bigger home because of a disability should also be exempt. We know that the open market doesn’t cater particularly well for these people, and they should not be penalised for living in social housing when in many cases there is nowhere else for them to go. It takes away from the principle of using our welfare system to protect the most vulnerable people in our society.”

National Housing Federation chief executive David Orr also agreed that the exemptions do not go far enough, claiming that the bedroom tax is "still an unfair and perverse tax which will hit hundreds of thousands of other vulnerable people living in social housing around the country".  

He said: “The Department of Work and Pensions’ continued claim that Discretionary Housing Payments (DHP) will protect all of the most vulnerable is simply not true. Even if DHP was divided equally only among those receiving Disability Living Allowance, they would receive only £2.51 a week, compared to an average loss of £14 per week. It does not add up.

“Today’s concession is an admission that the bedroom tax is ill-thought and incompetent. The government must repeal this ill-conceived policy, but at the very least right now it must exempt disabled and other vulnerable people from these cuts.”