Rachel Reeves ignored pleas to reverse her cuts to winter fuel payments amid warnings that five in six pensioners living in poverty will lose out.

The Chancellor said retirees are £900 “better off” than they were a year ago as she defended plans to strip them of hundreds of pounds this year.

In a House of Commons mauling, Ms Reeves was told she had made a “chilling political choice to balance the books of this country on the very frailest shoulders”.

It came as analysis by a former pensions minister showed 1.6million older people who are below the poverty line will not qualify for payments this winter.

Sir Steve Webb, who is now a partner at pension consultants Lane Clark and Peacock, said: “There is a range of ways in which the Government could target spending on winter fuel payments, but our analysis shows that limiting payments only to those on pension credit will leave the vast majority of pensioners below the poverty line losing out.

“As an alternative, winter fuel payments could be targeted on those in lower-value properties, which would protect most poorer pensioners, but would dramatically reduce the saving to the Chancellor.

“Taxing winter fuel payments would raise far less than the Government’s plans and could be administratively complex.

“It is ultimately a matter for politicians to decide on the balance between raising revenue and protecting the vulnerable, but it is clear that continuing payments only to those on pension credit will mean large numbers of already low income pensioners losing out.”

Ms Reeves is axing the universal winter fuel allowance, which is £200 for pensioners under 80 and £300 for those over that age, to save £1.5billion.

Instead, only retirees claiming pension credit and some other benefits will be eligible.

It means the 11.4million people currently in receipt of the payment will drop to just 1.5million.

LCP analysed Department for Work and Pensions statistics on low-income pensioner households.

The poverty line is widely measured as a household income below 60 percent of the national median average, which works out to around 1.9million people over pension age across the UK.

Only around 300,000 are receiving pension credit. About 800,000 pensioners are eligible but do not claim it.

The research looked at other options for making winter fuel payments more targeted, including paying only to households in council tax bands A-D, paying only to older pensioners aged 80-plus or bringing winter fuel payments within the definition of taxable income.

If found that linking to council tax bands would protect the large majority of low-income pensioners, but would substantially reduce the amount the government saved.

Paying only to older pensioners would still leave more than a million poorer pensioners aged under 80 still losing out.

Bringing payments into the tax net would raise only a modest amount – about £300million – and would involve complex administration, the research suggested.

Ms Reeves faced pressure from her own backbenchers as well as the opposition as she faced MPs for the first time since announcing the cuts.

Labour’s Rachael Maskell warned the average rent rise in York of 11.9 percent exceeded the state pension rise by £380 this year.

She said: “With the loss of the cost-of-living payments and winter fuel payments, an increase in the energy price cap and cost of living, pensioners are frightened about how they’re going to keep warm this winter – as am I.”

Labour MP Paula Barker said the charity Age UK reports there are around one million pensioners who “just miss out” on the winter fuel payment, noting: “These are people living on modest incomes within £50 of the poverty line, who will miss out due to a tiny occupational pension – including many in Liverpool Wavertree.”

Conservative former minister Dame Harriett Baldwin said Ms Reeves has made a “chilling political choice to balance the books of this country on the very frailest shoulders” by making changes to the winter fuel payment.

Wendy Morton, another Tory former minister, said many pensioners were “worried at the prospect” of losing their winter fuel payment “on which they rely”.

Liberal Democrat MP Steve Darling raised concerns about pensioners being able to make ends meet as we enter into the winter period.

He said: “They have had no time to save for this, and therefore it’s a complete shock to them.”