Iain Duncan Smith is fighting to stop the Chancellor shelving his universal credit scheme.

George Osborne reportedly wants to block the Work and Pension’s Secretary’s £2billion flagship reform amid growing concerns about its escalating cost.

Its introduction, set to revolutionise the way millions get their benefits, has already been delayed by IT problems.

Now the Treasury fears it could cost billions of pounds more before it is ready to be rolled out in mid-2014.

Mr Duncan Smith is said to have refused to be moved in the reshuffle to make sure the scheme is not ditched.

But Cabinet Office Minister Francis Maude admitted yesterday that universal credit was not “there yet” and said bringing it in on time was a “challenge”.

He told the BBC: “None of this is straightforward.”

The scheme will see all the major benefits – housing, working tax credit, child tax credit, income support, Jobseeker’s Allowance and employment and support allowance – bundled into one monthly payment.

The DWP denied the timetable has slipped.

But Shadow Work and Pensions Secretary Liam Byrne said: “The Chancellor smells chaos at the DWP, which is why he wants Iain Duncan Smith out.

“It’s now an open secret that universal credit is in trouble.

"Labour has been warning for months ­ministers need to get a grip of this ­flagship programme before it sinks.”