The decision to lower standard benefit payments by 6.5 percent was made by welfare minister Norihisa Tamura and Finance Minister Taro Aso. The reduction will hit in August.
Since the standard benefit payment provides the basis for determining other levels of public assistance, such as subsidies for school expenses, reducing it may also affect low-income earners even if they are not on welfare.
Tamura said after the meeting that he will implement the measures so the decision does not adversely affect such earners.
The actual amount doled out per household will be slashed by a maximum of 10 percent from the current level, which is based on age, number of family members and area of residence.
Welfare recipients hit a record high of 2.14 million in October 2012 and the state budget for benefits, including medical assistance, stood at around ¥2.8 trillion for fiscal 2012 ending in March.
Later Sunday, the government and ruling parties approved the fiscal 2013 budget proposal, with expenditures in the general account budget totaling ¥92.61 trillion. The Cabinet will sign off on the budget on Tuesday and send it to the Diet.
At the approval meeting, Prime Minister Shinzo Abe called for the swift enactment of the budget because it “will enable us to implement economic measures in a seamless manner and tackle major challenges, such as reconstruction (from the 2011 quake and tsunami) and disaster prevention.”