The investigation will cover how overpayments of Carer's Allowance linked to earnings accrued and why this has happened, what changes can be made to reduce the risk of such overpayments accruing in future and what the DWP can best do to support those who have already accrued overpayments.

Minister for social security and disability, Stephen Timms MP, said: ‘Carers wishing to pursue more financial independence should be encouraged to do so and not be unknowingly punished.

‘We need to get to the bottom of what has been going on. Publication of the terms of reference is the next step in this important work. The review also builds on the action we've already taken to boost the earnings threshold which will benefit more than 60,000 carers.'

The review is expected to deliver its findings and recommendations to ministers by summer 2025.

Leader of the Liberal Democrats Ed Davey said: ‘I'm glad that campaigners were able to secure this review into the appalling scandal that has seen so many family carers pursued for repayments of Carer's Allowance, but it cannot be an excuse for ministers to sit on their hands until the review finishes next summer.

‘This scandal has already dragged on for years under the last Conservative Government, and there are things that ministers should be doing today to put things right. At the very least, they should immediately halt repayment demands and threats of prosecution until the review has completed and the system has been reformed.

‘It is also disappointing that the review will not look at the need for bigger reforms to support unpaid carers properly. Liberal Democrats will continue to stand up for our wonderful carers and fight for the support they deserve.'