The Government has revised its controversial clampdown on housing benefit by exempting armed forces families and foster carers from the so-called "bedroom tax".
The move, likely to be perceived as another U-turn, followed concerns raised by a Westcountry MP over households losing welfare if a bedroom was empty because someone was away serving in the military.
Devon and Cornwall has arguably the largest number of military service personnel of any region, with around 14,500 men and women, principally in the Navy, based in the two counties.
Under the Government's proposals for an under-occupancy penalty – dubbed a "bedroom tax" by Labour but a "spare room subsidy" by David Cameron – people would receive a cut in housing benefit where they are deemed to have spare bedrooms.
Ministers had resisted a sustained Labour campaign, which warned that vulnerable families would suffer, by arguing the policy would cut both the spiralling welfare bill and housing waiting lists.
Work and Pensions Secretary Iain Duncan Smith said a hardship fund was always intended to protect 5,000 foster carers and "rather fewer" armed forces personnel groups – but the new regulations put these protections "beyond doubt".
In Prime Minister's Questions in January, Plymouth Moor View Labour MP Alison Seabeck raised concerns over the impact on military families. The city is home to Devonport Naval Base and naval and army commandos.
In the wake of the climbdown, Ms Seabeck said: "I am pleased they have appeared to listen the pressure that's been applied, particularly for armed forces families. My constituents have been deeply concerned."
The Department for Work and Pensions also confirmed councils would be given the power to exempt families with severely disabled children. Exemptions were already in place for pensioners.
Ms Seabeck added: "I still think there are questions which will arise if local authorities' decision-making processes are different and there's a postcode lottery in relation to disabled youngsters."
Andrew George, Liberal Democrat MP for St Ives, whose constituency includes RNAS Culdrose near Helston, said the policy should be scrapped entirely as it was "doubly unfair and inept" in the rural Westcountry, where there is a chronic shortage of social housing.
He said: "When we get to a stage where there is sufficient affordable houses we can start providing incentives to get the right-sized families into the right-sized properties. Until then it's a bit of scapegoating."
Estimates based on official figures indicate 9,170 people living in social or council housing in Devon and Cornwall are set to lose an average of £637 a year.
Mr Duncan Smith insisted the policy remained "absolutely vital" as far too many people were living in accommodation which they did not fully occupy, while millions are trapped on waiting lists or living in overcrowded accommodation.