Liz Truss is set to be told by warring Cabinet ministers that she must ditch her plan to snatch money from 5.6million people on Universal Credit.
But ministers will warn her at a showdown meeting on Tuesday that she will be defeated by her own MPs if she attempts to push ahead.
Some backbench Conservatives have already voiced fears to Labour - who will be looking in detail at how they could block any benefit cut once Parliament returns on Tuesday.
With Tory anger already at fever pitch weeks before any decision, a Truss ally told the Sunday Times: “She's beginning to realise it will never get through”.
It comes as the Child Poverty Action Group says 200,000 more children will be pushed into poverty if benefits only rise in line with earnings - about 5%.
A single unemployed adult would lose £185, a single disabled adult would lose £380 and a working couple with two children would lose £752, according to the Resolution Foundation.
CPAG chief executive Alison Garnham said: "Struggling parents need reassurance now… U-turning on children's futures cannot be an option.”
The Tory civil war showed no sign of cooling today despite four Cabinet ministers all urging calm in public.
The unity quad included Penny Mordaunt, who has already warned publicly against a real-terms benefit cut, and Suella Braverman, who has accused Tory rebels of a “coup”.
Ex-Cabinet minister Nadine Dorries warned the party faces “complete wipeout” unless Ms Truss changes course.
And Mel Stride, chair of the Treasury Committee, warned the mood was “febrile”, telling Times Radio: “There are a lot of backbenchers and deep members of the government who are very concerned at where we are in the polls.
“We've got two years to a general election. There's a recognition that we've got to turn things around and start doing it very quickly”.
Shadow Work and Pensions Secretary Jonathan Ashworth said Tory MPs “have already reached out to me” in a bid to “work together and block these very deep cuts”.
The frontbencher confirmed Labour would raise benefits with inflation - but dodged saying how the party would fund it, saying it was a government pledge so for the Tories to set out.
Labour ex-chancellor Alistair Darling said the reputation of the UK is being trashed, the financial turmoil was "chaotic" and “self-inflicted” and the government is giving "a textbook example of everything you shouldn't do in difficult times".
Cabinet Office minister Nadhim Zahawi today insisted no final decision had been made about how high to raise benefits.
But a Cabinet minister told the Sunday Times failing to raise benefits by inflation was "not a political reality".
Another said: "She can either get ahead of this now and make it go away.
“Or we will be dragged kicking and screaming towards another screeching U-turn when they realise it's a game of arithmetic and the numbers will not stack up."
Labour notched up a 21-point lead over the Tories last night with pollster Opinium - which said it was the biggest Labour lead it had ever recorded.
The brutal polling put Ms Truss's personal approval rating at minus 47, and Chancellor Kwasi Kwarteng's at minus 51.
Mr Kwarteng, a long-term Truss ally, is said to have privately put her chances of survival at "only 40-60" - although he denies the remarks.
Ex-minister Grant Shapps, who gave Ms Truss 10 days to turn things round five days ago, is said to have a spreadsheet recording 237 meetings where Tories voiced doubts about the PM.
Truss allies lashed out at Michael Gove, branding him “sadistic”, “stabbing the PM in the back” and “trying to destroy” after he toured the Tory conference fringe sounding off.
In vicious briefings one told the Sunday Times: “There is something deeply troubling about the darkness inside him. It grips him and it takes over. It corrupts his soul”.
A former Sainsbury's boss today said cost-of-living challenges are more severe than at any time since the 1970s.
Justin King told Sky News: "I think supermarkets have always taken very seriously the role that they play in helping their customers, if you like, make ends meet.
"The 1970s... is probably the last time the challenges to households were as great."
It comes after Asda announced it would offer cheap meals in its cafes to help over-60s struggling with spiralling living costs.
Mr King also hit out at Liz Truss's plan to cut energy bills in a blanket way for all households.
"As a general rule I don't think the Government should be giving to those people who can afford to pay their bills, so it can give more money to those who are going to struggle," he said.
