Up to 13,000 benefit claimants could receive compensation payments of up to £5,000 after the Department for Work and Pensions (DWP) settled a major court claim.
The settlement follows cases where people lost income after being moved from legacy benefits to Universal Credit.
More than 200 claimants have already been awarded damages ranging between £200 and £3,000.
The compensation is being offered to those who were receiving disability benefits and were transferred to Universal Credit before September 2019, resulting in a loss of crucial premium payments.
Some claimants lost severe disability premiums (SDP) during the transfer, while others missed out on the Enhanced Disability Premium (EDP), resulting in income losses of up to £180 per month.
The 'SDP gateway', which would have protected claimants' income, was only implemented after a successful High Court battle in 2019.
The DWP has now set up a lawful compensation scheme to repay these claimants over £5,000
GETTYLaw firm Leigh Day secured this initial victory on behalf of two benefit claimants who had lost income.
The current settlement includes compensation for stress and injury to feelings that claimants experienced during this period.
The same law firm has now settled similar cases for 275 claimants with the DWP.
The department has now set up a lawful compensation scheme to repay these claimants, with payments estimated to be in excess of £5,000.
It is the non-financial element of the claim that has been settled, with compensation being for the stress and injury to feelings claimants had suffered.
However, Ryan Bradshaw, who represented all the claimants in both cases, said that as many as 13,000 benefit claimants could be entitled to financial compensation.
Bradshaw said: "I am glad to have settled this claim on behalf of my clients. However, there are thousands of others who have been similarly affected who have not been in a position to bring a claim like this.
"They too will have suffered unnecessary stress. A suitable scheme, compensating all the people who have endured discrimination at the hands of the DWP, ought to be urgently put in place. The mistakes made here should never be repeated."
LATEST DEVELOPMENTS:
Among those affected was Philippa, a 39-year-old from Chesterfield, who suffers from chronic autoimmune condition fibromyalgia, causing pain throughout her body, dehydrated discs in her spine, and brain fog.
The loss of DWP payments worsened her health issues and left her struggling to afford essentials.
Philippa said: "When you're on benefits, you don't feel secure. Every day you wait for the little brown envelope.
"The compensation has meant the difference between being able to access prepared meals which cover my nutritional needs, versus buying the cheapest ready meals which are not nutritionally balanced enough."
Law firm Leigh Day secured this initial victory on behalf of two benefit claimants who had lost income
PAA DWP spokesperson said: "Following this ruling the department has begun the process of compensating affected claimants."
The compensation scheme has been established to address the financial losses experienced by those who were moved to Universal Credit without proper income protection.
Those who believe they may be eligible for compensation will need to wait for further details as the DWP implements its compensation process.
