Nick Clegg has suggested wealthy pensioners should be stripped of a raft of benefits as Britain continues to struggle to balance the books.
The Deputy Prime Minister insisted he was driven by the principle of fairness and that meant "money should not be paid to those who do not need it".
Such a move would lead to means-testing for the winter fuel allowance, free bus travel, prescriptions and television licences. Prime Minister David Cameron is committed to keeping the universal benefits in place until 2015 but many Tories are keen for reform.
In a keynote speech, Mr Clegg mounted a vigorous defence of the coalition's welfare reforms, insisting the Government had an "absolute duty" to ensure the system was fair to all.
While acknowledging the changes had at times been "painful and controversial", he argued that the Liberal Democrats had ensured they were firmly anchored in the political centre ground. Without reform, there was a risk of a "total collapse" in public support for the whole principle of welfare, he said.
His speech - on the eve of the fifth anniversary of his election as leader of the Liberal Democrats - comes at a difficult moment for the Lib Dems with a series of weekend opinion polls showing them slumping to fourth place behind the UK Independence Party, with their support down to just 8% or 9%.
Mr Clegg acknowledged that governing in difficult times had meant the party had acquired a "harder edge", but said the alternative was "a retreat to the comfort and relative irrelevance of opposition".
In his address to the Centre Forum think tank, he said: "When two thirds of people think the benefits system is too generous and discourages work then it has to be changed, or we risk a total collapse in public support for welfare existing at all."
"We need welfare protection for people who fall on hard times. Of course. But you cannot ask low income working people to pay through their taxes for people who aren't in work to live more comfortably than they do."
While the Lib Dems had ensured that protections for the most vulnerable were built into the system, Mr Clegg emphasised that reform was not forced on them by Conservatives. He said: "It was in our manifesto and on our agenda right from the start. The Liberal Democrats are now the party of welfare reform - sensible, centre ground welfare reform."