Disability benefit claimants are being stripped of access to BMWs, Mercedes and other high-end marques after ministers demanded an end to taxpayer-funded “luxury motoring upgrades”.

Motability – the taxpayer-subsidised vehicle scheme for disabled people – has announced it will “immediately” stop offering BMW, Mercedes, Audi, Lexus and Alfa Romeo models, insisting it must focus on cars that “meet disabled peoples’ needs and represent value and purpose”.

The move means thousands of claimants currently driving these models could be forced to switch brands the next time they change vehicles.

BMW told the Telegraph the decision would be “disappointing” for the many of its customers on the scheme, adding: “We will work with Motability to ensure prompt vehicle delivery for any existing orders.”

Mercedes declined to comment. Mini, owned by BMW, is not affected.

Chancellor Rachel Reeves had raised concerns that the scheme had drifted into offering a “premium motoring experience” far beyond what most working families can afford.

The overhaul comes amid mounting pressure on Motability over spiralling costs and soaring demand.

The scheme consumed a record £2.8 billion of taxpayer support last year following a surge in applications for Personal Independence Payment (PIP).

Under the system, claimants can exchange their mobility benefit for a lease package covering the car, insurance, servicing and breakdown cover.

Most models up to around £27,000 require no upfront charge, while pricier vehicles can cost claimants up to £7,500, which they have to find themselves.

Motability has also faced scrutiny after concerns that some applicants exaggerated conditions to access the scheme. Some critics have turned up the heat on the Motability scheme by using false claims that people can qualify for ‘free’ cars solely through conditions such as acne and anxiety.

With 815,000 vehicles on the road, Motability is now Britain’s biggest fleet operator and expects half its vehicles to be British-built by 2035.

Andrew Miller, the chief executive, defended the programme’s role, saying: “The Motability scheme makes a difference to disabled people’s lives every day and our customers tell us it is a lifeline to freedom and independence.

“Working with government and the automotive sector, we want to do even more to support the economy and our ambitious commitment should put British car manufacturing into top gear.”

Ms Reeves added: “Backing British car manufacturing will support thousands of well paid, skilled jobs and is exactly the long-term investment our Modern Industrial Strategy delivers. We are growing the economy to bring down debt, cut NHS waiting lists and cut the cost of living.”