Coalition plans to relocate the unemployed to areas of the country where there are jobs have been condemned as "disgraceful".
Work and Pensions Secretary Iain Duncan Smith said he wanted to tackle "ghettos of poverty" by encouraging people to move elsewhere.
Labour said the comments echoed the words of then-Tory minister Norman Tebbit in 1981 when he suggested the unemployed should "get on your bike" and look for work.
Mr Duncan Smith, the MP for Lord Tebbit's former parliamentary seat of Chingford, said millions of people were "trapped in estates where there is no work" and could not move because they would lose their accommodation.
The proposed scheme would allow them to go to the top of the housing list in another area rather than giving up their right to a home.
"In the UK today, under the last government, we have created almost ghettos of poverty where people are static, unable to get work because there isn't any work there, unable therefore to get to work because the wages aren't high enough so they can't get there and they are stuck," he told Sky News. "And you've got two and three generations of people, unemployed, in households and whilst there's been more work created over the last 15 years actually most of that has gone to households that already have work."
"We have tons of elderly people living in houses which they cannot run and we've got queues of desperate people with families who are living in one and two-bedroom houses and flats," he said.
Shadow education secretary Ed Balls said the plans were a retreat "back to the 1980s". "This is back to the 1980s, it's this idea that somehow the only solution to unemployment is to cut benefits and say to people 'go and do it for yourself' and we know this just doesn't work."
His fellow Labour leadership contender Ed Miliband branded the policy "disgraceful".
The shadow energy secretary told BBC1's Politics Show: "What he is saying to whole parts of the country is: 'we have no hope as a government of getting work into your area so you are going to have to move out of your communities'. And that is frankly disgraceful."
