There were 173,060 Newstart Allowance recipients with a disability at March 2014, and 24.9 per cent were receiving support from a Disability Employment Service or had a “partial capacity to work”.

More than 133,000 Newstart recipients were assessed as having a work capacity of less than 29 hours a week (at December 2013).

The main disability types are assessed, and broken down by the top 10 medical conditions. The main health barrier experienced by jobseekers on Newstart was physical disabilities, which affected the largest cohort of jobseekers.

Maree O’Halloran, of the Nat­ional Welfare Rights Network, said the figures were alarming.

“Some jobseekers have more than one disability and 100,600 jobseekers had physical disabilities affecting their limbs, shoulders and upper arms, spine and another musculo-skeletal disorder,” she said.

These jobseekers had problems lifting, walking long distances or standing for long periods.

“Over 72,000 jobseekers experienced depression or were dealing with psychiatric/psychological disorders or coping with anxiety. Other common disabilities included hypertension, which affected 12,410 jobseekers, and circulatory system problems, which was a serious problem for 10,365 people on Newstart.

“It is extremely common for people to experience both a physical disability (and) a mental health condition.

“At Welfare Rights, we see large numbers of unemployed people battling major health issues; many are also impacted by housing problems or are experiencing family violence. Sometimes, the employment service system fails to adequately support these jobseekers.

“The extra costs of managing their disability is a constant challenge on an inadequate Newstart of less than $260 a week. Some are going without food or essential medications to cover accommodation,” Ms O’Halloran said.

Social Services Minister Kevin Andrews said “taxpayers expect their money to be used to support those in genuine need and our approach is making sure this happens. More than 2000 people apply for the (Disability Support Pension) every week, so we need a thorough process to ensure that those who need financial assistance get access to the benefit.”

The government said in 2012-13 there were 127,173 DSP claims.

Welfare Rights said there was a danger that the Newstart Allowance would become the main payment for people with disabilities as governments imposed tighter conditions on the DSP.

“It is essential that Newstart is increased to a rate that allows people to meet the essential costs of living.”

Labor is claiming a victory for itself and the people by forcing the government into what it labelled a “humiliating backdown”.

“This is your victory over Minister Andrews and Tony Abbott,” Opposition Leader Bill Shorten told parliament.

Social Services Minister Kevin Andrews preferred a more pragmatic explanation, saying repackaging the bills may be more attractive to Senate crossbenchers.

The government denies it has backed down on its welfare changes, arguing nothing has changed.

Measures reintroduced to the lower house maintain all its planned changes affecting the young unemployed, pensioners and families.

They include forcing young people to work for the dole, moving under 25s onto the lower Youth Allowance, families with children aged over six being cut off from the Family Tax Benefit B payment and raising the age pension eligibility to 70 by 2035.

Mr Shorten said the compromise had destroyed the credibility of the budget and the Prime Minister.

“This is the government defeated.”

Mr Andrews instead claimed a victory, saying with the support of Labor $2.7 billion worth of non-controversial welfare cuts would pass parliament.

“That’s actually success,” he said.

The government’s “principal position” was to stand by its changes but it will be open to “sensible talks” with crossbenchers over the coming days and weeks.

That may include making under-30s wait one month instead of six for the dole.

WELFARE CHANGES PASSED LOWER HOUSE WITH LABOR BACKING:

* Rename carbon tax compensation payment to energy supplement

* Freeze indexation for two years on asset value for all working-age payments

* Disability support pensioners under 35 to be reviewed for work ability

* Limit six-week overseas travel portability for student payments

* Include untaxed super in assessing access to Commonwealth Seniors Health card

* Only those earnings

Treasurer Joe Hockey refused to reveal the cost but today confirmed the Mid Year Economic And Fiscal Outlook would reveal how it would be paid for.

Since the May budget Tony Abbott has announced $630 million in new spending to boost resources for intelligence agencies and to improve community engagement.

The Prime Minister has also deployed 600 defence personnel and eight Super Hornet fighter-bombers, together with other resources, to the Middle East to be ready to join the battle against Islamic State in Iraq. The operation could cost around $250 million every six months.

“There have been a number of initiatives already announced which are very important such as increased funding for security,” Mr Hockey told ABC radio’s AM program.

“We need to identify the savings that help pay for those sorts of new initiatives.

“You’ll see it in the midyear update which is in December.”

But Mr Hockey denied reports he had raised the white flag on changes announced in the May budget such as re-indexing fuel excise, the $7 GP co-payment and university changes that were not supported in the Senate.

He also rejected the claim that making unemployed people aged under 30 wait six months for the dole was a bad policy.

“If you can win a battle, you take that victory, but you never give up on the war,” he said.

“We are going to continue with the principles and we are going to continue with the policies because ultimately what we are doing is right for Australia.

“We don’t give up on good policy. We don’t give up on doing what is right to address the legacy that Labor left.”

Mr Hockey said it was hugely important the budget was returned to surplus so the government could begin to pay off the debt left by the former government and stop the trajectory of debt going to $667 billion in 10 years.

“We are working through our plan,” he said.

He said the government would take what it could get through the Senate but keep pursuing the rest.

Mr Hockey said critics had said the government would not succeed in repealing the carbon and mining taxes and passing other measures, but they had been proved wrong.

Finance Minister Mathias Cormann also said “nothing is on the backburner”.

“The government remains firmly committed to all of the budget measures,” he said.

Bill Shorten warned the government not to use the increased cost of national security as an excuse for unfair budget cuts.

“That would be a dreadful mistake by the government,” the Opposition Leader told reporters.

Mr Shorten said the budget was in chaos and disarray because it is unfair.

“If you thought this budget was a shocker, you ain’t seen nothing yet,” he said.