By Tom Parmenter, Sky News Correspondent
The families of three toddlers have taken the Government to court to argue that the "benefit cap" policy is unlawful.
The two three-year-olds and one-year-old have all been put forward along with their mothers to fight a test case at the High Court.
All three families live in London and say the high cost of living in the capital means the benefit cap could leave them destitute.
Currently, they say they are forced to live in expensive temporary accommodation which would suck up the majority of the £500-per-week benefit limit being imposed on claimants.
The principle of the cap is to ensure it pays to work and that benefits claimants do not earn more than the average working family.
Rebekah Carrier, the solicitor representing the families, told Sky News there were many others facing similar scenarios.
"It is thousands rather than hundreds of thousands, but the effect on these thousands of people is very, very extreme," she said.
She described the limit as a "cruel and arbitrary policy".
"It will have a catastrophic impact on our clients and many thousands more vulnerable families. They face street homelessness and starvation," Ms Carrier said.
The judges are being asked to rule that the cap breaches the UN Convention on the Rights of the Child, and the European Convention on Human Rights, which protects the right to respect for home and family life.
Campaigners argue that the impact of the cap is most acute in London because of the lack of affordable housing and high housing benefit costs.
One of the families taking action includes an illiterate single mother with four children.
Their private rented accommodation costs £395.50 per week. The benefit limit will mean they will be left to get by on £104.50 per week for all living costs and utilities.
In a witness statement the mother said her current home was cold, damp and infested with mice.
She said they were desperate to live elsewhere but there was no cheap accommodation available locally and that the waiting list for council housing for such a large family was over 10 years.
The families in the High Court case each have several children.
A Department for Work and Pensions (DWP) spokesman said: "We are confident that the measures are lawful.
"The benefit cap sets a fair limit to what people can expect to get from the welfare system - so that claimants cannot receive more than £500 a week, the average household earnings."
The case, which is an application for a Judicial Review, is expected to conclude on Friday.
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