Thousands of people on benefits are being “unlawfully discriminated against” under crisis-hit Universal Credit, the High Court heard.

In a test case over the beleaguered reform, three claimants launched a legal challenge and argued they were left worse off after being moved on to the new system from their previous benefits.

Patricia Reynolds, 51, who is disabled and lives alone, says she lost £180 a month, while a 38-year-old woman identified only as TD and her severely disabled 12-year-old daughter received £140 less a month for 18 months.

They claim that having been transferred on to Universal Credit because of “errors” made by the Department for Work and Pensions (DWP), they were unable to return to their previous, higher level of welfare payments.

Nor were they eligible to receive “transitional protection” payments, cash top-ups designed to cover shortfalls for people moving on to the new system.

Lawyers for the trio, whose case is being supported by the Child Poverty Action Group (CPAG), told the court on Wednesday their “less favourable treatment” is unjustified.

Universal Credit has been beset by claims that it has increased poverty amongst claimants and led to a rise in homelessness.

It has been subject to multiple government u-turns as successive Work and Pensions secretaries sought to amend the system as it rolls out.