David Cameron has rejected a proposal from a senior Conservative MP to limit child benefit to two children for every family.

Nadhim Zahawi, a member of the No 10 Policy Board, called for child benefit and child tax credits to available only for a family’s first two children.

The suggestion comes after George Osborne suggested that a Conservative government would seek to cut billions of pounds more in welfare spending if the party is in power after the next election.

Mr Zahawi said that capping benefits by family size would "save billions and help the next generation think more carefully about their relationship with the welfare state".

The MP is one of several backbenchers on the policy board, which is theoretically drawing up policies for the party’s 2015 general election manifesto.