A look at what the benefit cap is, what it will mean for those receiving benefits and what the political reaction to the cap has been.
The so-called 'bedroom tax' will affect around 660,000 social housing tenants across the country but how will it work?
London councils are acting now to prepare tenants for benefits cuts.
Demonstrators, protesting against the benefits cap, waved banners and handed out leaflets outside a Benefit Delivery Centre in Stratford this morning.
They called for the government to cap rents - rather than benefits.
In a statement, the group said:
"At £500 a week for couples or people with children, the cap is meant to reflect the earnings of the average family. But it fails to include extra income from child benefit or housing benefit that a family renting in London would also get.
"And it's a lie that this cap is about saving money. In its calculations, the DWP has not taken account of the extra costs to local authorities in dealing with the homelessness created. Landlords all over London have already been evicting tenants on housing benefit in anticipation of the cap.
"We mustn't fall for the rhetoric used by the government to describe claimants, which only distracts us from identifying the real scroungers...the rip-off landlords who raise rents every year...or the tax exiles who buy up mansions in our city...while families...are forced to...leave London.
"If the cap isn't scrapped or landlords don't lower their rents significantly, it could mean thousands of families being forced to move out of London, breaking up communities and support networks."
Labour leader Ed Miliband said the benefits cap should take into account housing costs in each region.
"We've said we're in favour of a benefit cap but it has got to be adjusted regionally depending on housing costs in each region," he said.
"The danger of the way the government is doing the cap is that it forces people into temporary accommodation, bed and breakfast accommodation, which drives up costs, not reduces them.
"And actually what we're seeing with the welfare bill is, despite the cuts the government is making, the welfare bill rising and not falling."
Kate Bell, from the Child Poverty Action Group, said rising rent costs in London would mean the benefit cap hits families in the capital extra hard.
"We don't think it's fair to make children suffer for this cap.
"The real reason why people are going to be hit by the cap is because of the cost of their housing - most of the money these people are receiving in state support is going to housing benefit, which, of course, goes to the landlord, not to the family."
Claimants in the London boroughs of Haringey, Enfield, Croydon and Bromley are the first to face a cap on their benefits.
Employment minister Mark Hoban said it was "only fair that those who are on benefit face the same choices" as those in work.
But shadow minister for disabled people Anne McGuire highlighted the "major issue of imposing that level of benefit cap in London, where the biggest factor in benefits is actually the high rents."
Political correspondent Libby Weiner reports:
Stephen Timms, Labour’s Shadow DWP minister, said the government should reduce the benefits bill by "getting the country back to work":
“For all the Tory rhetoric, the true picture of this Government is one of economic failure. They are having to borrow £245 billion more than they planned, not to pay for the investment needed to grow our economy, but to pay for more welfare spending caused by high unemployment," he said.
“We desperately need a change of direction. Labour has called for a compulsory jobs guarantee to give the long-term unemployed a job, which they will have to take up or lose their benefits.
"One Nation Labour would get the welfare bill down by getting the country back to work, and making work pay.”
Employment Minister Mark Hoban has defended the Government's plans to limit the amount of benefits families can receive.
Speaking to Daybreak he said: "Those people who are on benefits should face the same choices as those who are in work and this cap does that.
"The best way for this cap to affect families regardless of the number of children, the best way to avoid its affect, is actually to get into work."
The Prime Minister tweeted that today was a "big day for welfare reform" as a benefit cap pilot begins in four London boroughs.
A big day for welfare reform as we pilot a cap on benefits equal to the average wage. Amazingly Labour oppose it.
The changes mean couples (with or without children) and lone parents will be limited to £500 and single adults capped at £350 per week in total benefits.
For much more details on who is affected and which benefit payments are included, read: What is the benefit cap?
The Government's household benefit cap will be rolled out in parts of London today.
The welfare reforms will begin in the four boroughs of Bromley, Croydon, Enfield and Haringey.
Speaking to Daybreak, David Lammy, Labour MP for Tottenham said:
I think this is brutally unfair to families, these are often women with three or more children and they now face eviction, hardship, the loss of over £100 a week for many of them, for no fault of their own.
Rowena Cockayne from North London stands to lose around £100 a week when her benefits are capped in July.
The mother of two said she will not be able to pay her rent and will end up being evicted, "I don't know where I will be sent, even further away from my support network."
An estimated 40,000 households could be hit by the new £500 a week benefits cap which will be rolled out by the Government today.
Households could lose up to £90 a week under the new proposals which is expected to save £275 million a year from the welfare bill.
National implementation will begin in July, with the policy fully in force by the end of September.
Work and Pensions Secretary Iain Duncan Smith said:
The Benefit Cap sets a clear limit for how much support the welfare state will provide - the average wage for working households.
But it's also a strong incentive for people to move into work and even before the cap comes in we are seeing thousands of people seeking help and moving off benefits.